Mike Dolt Enterprises
Mike Dolt Enterprises
User: nizak, Location: Northern illinois
Asked on: Thursday, April 28, 2011 at 2:18 pm EDT
Answered on: Tuesday, May 14, 2024 at 4:44 am EDT
Question: Do most here price their material from an "material price guide" or from the actual invoice price ? I got a SQ D xfmr that i purchased from my local wholesale house, it was $167, I was curious about the price so i went online and found the same product anywhere from $240-$329. I would normally add 30% and bill it as such, $217.00. If I used the $329 figure I would have billed it at $427.Am I cutting myself short by going my route, or would it be unfair(or maybe unmoral) to charge the higher price? This was not a bid job, it was a T/M job that was called in from a commercial client who needed their exterior lighting fixed after a snowplower hit a light pole and took the existing xfmr off. Thanks.
Pricing Practices
In the electrical industry, there are two common approaches to pricing materials:
Invoice Price
Using the actual invoice price paid for the materials.
Material Price Guide
Referencing an industry-accepted publication or database that provides current market prices for electrical materials.
Industry Norms
Residential Work
Most electricians use the invoice price for residential work.
Commercial Work
For larger commercial projects, it is more common to use a material price guide.
Your Situation
Since this was a T/M (time and materials) job, you have the flexibility to use either pricing method. However, it is generally considered best practice to use a material price guide for the following reasons:
Fairness
It ensures that you are not overcharging your client or underpaying yourself.
Consistency
It provides a standardized approach to pricing materials across different jobs.
Market Knowledge
It reflects the current market conditions and fluctuations in material prices.
Your Options
Option 1: Use the Invoice Price Add a markup of 30%, resulting in a price of $217. This would be a fair price if the invoice price is a reasonable reflection of the market value.
Option 2: Use the Material Price Guide Find the price for the same product in a reputable material price guide. Add a markup of 30% to the price from the guide, resulting in a price of $427. This would be a higher price but may be justified if the market value of the transformer is significantly higher than the invoice price.
Ethical Considerations
It is unethical to charge an unreasonable price. However, using a material price guide does not automatically mean that you are overcharging. The price guide provides an independent estimate of the market value, and adding a reasonable markup is an accepted industry practice.
Recommendation:
In this case, I would recommend using the material price guide. Given the significant price difference between your invoice price and the market price, it is reasonable to bill your client the higher price. Flag for review