How do you get over the “guilt” of product markups.
Of course when you’re offering a service that includes a product or material there’s going to be markups involved, but I always feel like I’m doing something wrong, almost like they’re going to go to the store and come back with “you charged me $17 per unit when the store only charged me $15 per” is there a way to get over this?
In my opinion, you shouldn’t feel guilty about markups if you’re providing real value. Customers are not just paying for the physical product — they’re paying for your time, experience, sourcing, transportation, warranty risk, convenience, and the responsibility you take on when you install it correctly.
Most customers are hiring you so they don’t have to spend their Saturday driving store to store trying to figure out which product to buy and hoping it works. That has value.
That being said, transparency goes a long way. I personally think it’s smart to either:
Both are normal in business.
Stores also give contractors discounts, rewards, and rebates because we consistently bring them business. That’s part of operating professionally, just like any other industry. You shouldn't be giving away your pro-xtra dollars or Lowe's rewards points to customers; that's your reward.
At the end of the day, if you’re honest, upfront, and delivering quality work, there’s nothing wrong with making a profit. A business has to be profitable to survive and continue serving people. I haven't been profitable for the last 5 years; this year is the first.
I totally agree with this
I’m over feeling guilty. I know my worth. I know that I will do it correctly. I know that they can count on me. So I put it back in their hands to see if they want to take the risk off my shoulders and go with someone else who can “do it for less”. If they ever come back with a response like, “oh that is way too much!” I normally respond with,” I Completely Understand. Everything is expensive these days. You can always count on me to do it right. So if you ever change your mind, please don’t hesitate to call me back.
One lady called me back 2 hours later and said, I want it done correctly and it wasn’t done right the first time. That’s why we called you. We’re ready to have this headache gone. She was very pleased in the end.
If you're doing a T&M job, the markup directly coincides with the risk of having to navigate the plethora of options for the specific product needed to get the job done. How much does it cost to do the research, order the part, and deal with the possibility that the product needs to be replaced/changed, re-installed with a different product, and finally warrantying it for xx months/years.
One more thought here... on rare occasion we will have a customer say "Hey i can get this x% cheaper on Amazon... can I buy it myself?", our answer is "Absolutely. Just know if there is an issue with it you are going to have to deal with the manufacturer directly and cover any associated labor costs." That typically stops the conversation quickly because they all the sudden understand why it costs more.
It can be a variety of reasons, most important is how do you run your business and what is included in the price/markup. We offer fair wages, benefits etc. We also have a supervisor, customer service rep and sales rep. We run a larger company which means more reliability for the customer. This is reflected in our pricing.
After years of giving away whatever deal I can get I have learned that the most fair thing for us all is to charge what you must to cover several things:
All of these are rational factors and customers usually see the value in what you’re doing for them by the end product
Honestly, every time I have to bill, I find myself wanting to lower my prices because I feel bad for charging so much. But that does make us any money.
The amount of times I've looked at an estimate and gotten sticker shock from my own prices is insane, even though I pride myself on having the lowest possible rates in my state.
I agree with you haha like I look at what we charge and I just double down on the not wanting to pay someone to do anything.
In my opinion, you should not be feeling guilty for this. As what's been mentioned before that, there's material handling and transportation fees. There's the risk associated with it. There's the professional knowledge that and all the training that you have gone through in order to come app with a diagnosis of the correct part that needs replacing in order to fix the unit. All those costs add up to the total cost of a repair bill. Not only that, you have the overhead costs of the office office staff office equipment, the hourly wage taxes that you have to pay as a business owner. All those go into factor in the total cost of the bill. Unless you are paying this person to do the job for them. They really should not be any guilt associated with the markup cost. And to see something that's $15 being marked up to $17. To be honest, I've seen it much worse where something that cost $15 was marked up to $200. And the customer willingly paid it.
I agree. That’s exactly why I mark up. Mechanics do it as well I went to meineke to get my car fixed and they told me the way they make money is by marking up the parts like 30%
I think it’s more common to feel guilty for wanting to help people out and not cover my own wages and time fairly. I see people struggling and want to help but I’ve still got my own expenses to cover so there is zero guilt pertaining to materials those cost what they cost. Transparency goes a long way and there will always be those who want it cheaper or ‘know someone who will do it for less’ that’s fine call them and I’ll still be here when they mishandle the job or quote you higher.
Why do you feel "guilt"? Do you believe you don't deserve to make money when you are providing a high quality service?
No guilt, prices keep going up, if you aren't making any money on your materials, you'll **bleep** your business
The real question that's been eating me up has been. How much should I markup products. I took a seminar that said you should mark up approximately 40% and that just doesn't sit right with me. Does anybody else have a recommendation?
I markup my materials at about 30% - mainly to cover the cost of research, travel, and the risk of unknown circumstances when I get onsite.
I mark up (now on some items still working it out) 25%. So that covers the cost of sales tax and then what I need to cover our fixed monthly overhead. So when I took our fixed monthly expenses then ratioed that out with how much we spent on supplies that is the number i ended up at.
