Home Forums General Discussion DID YOU KNOW? profit on materials

Hello everyone,
I am on the receiving side of the elevator service industry. I have elevators and manage their maintenance. My question is: What is the industry standard in determining the percentage of profit on parts?

Usually think of a random 4 figure number and double it from my experience of salesmen

El Vader,
Perhaps you would answer the following questions for me?

What percentage would you feel is fair?

Should the percentage be the same across all items purchase to repair or maintain your equipment? Should the percentage for a $30 of parts be the same as a $100,000 of parts?

Do you think that a group of people should be able to vote what you should earn or should you be able to market yourself to earn as much as someone is willing to pay you?

Last, if you decide the amount someone wants to charge for their services is too much! Are you able to elect not to use them?

The standard is the same you use in determining your pricing. It's what ever the market will bare.

It sound like to me you wish to keep your expenses down and your profits up!

Well El Vader I take it by your silence you were more interested in venting then discussing. That's too bad! I was hoping your participation would give me some insight.

Best of luck.

How about 300%, I've seen it.

When I worked at Otis it was 500%. Probably more now!

500% at Otis is BS, Otis financial controls wouldn't allow that to continue. I agree with jkh though, the market dictates prices. Buildings choose to roll their contracts into groups/national style agreements to reduce maintenance cost down to the lowest price a the industry can bear and expect top notch service. Elevator companies need to make up the margins in low bid maintenance with the extra billable items that come up.

Agree with me or not, the industry in the US is headed for a major shift. Contract prices have been driven down into the dirt over the last 20 years, at some point elevator companies will not be able to continue the level of service and innovations customers demand. Majors and independents both feel the pinch. I have noticed more customers lately are sharing their current pricing and demanding lower for resigns to which fewer and fewer companies show up to bid the maintenance. This is a sign the market is ripe for a correction, it just takes a while with 1-5 year contracts.

Well said GreenPants, could not agree more.

I agree, well said! I'm curious, what is your opinion on how we should conduct business in the future?

Personally, I live by my margins. During one of my early conversations with VatorGator, he described the type of customer they pursue. Since then we have utilized that philosophy in how we perceive our customer relationships. We haven't taken on work just to fill our book. We qualify our customers on a variety of standards we are looking for.

That's not to say we don't have our share of undesirables! Ha! So please share your thoughts.

I believe certain customers will stick with full maintenance national account type agreements but the market will correct when only current contract holder or no one shows up to bid the contract. The extras like testing, OT, obsolescence, free # of vandalism callbacks, etc. will be the negation points. True full maintenance customers don't want any extra billable items, they want static/predictable costs but they will need to pay the premium for that. I also believe this is very old school baby boomer style management of costs in large organizations.

I think full maintenance for smaller clients is on the way out. The current pricing/margins will remain but service companies will exclude major components. This in turn will setup a lot more alterations/mods of major components which makes the public safer and the units more reliable.

I avoid customers who shop for low maintenance pricing and have all original 25+ year old equipment without any upgrades or alterations. It is a good sign they will fight/ignore every dollar we propose and runs a higher risk of safety hazards to the public which means legal costs for us. It really sucks to have some LS customer paying almost nothing and we have to fork out 20k in legal cost to protect ourselves from our own client who has neglected their equipment and public safety.

I focus as much as we can on the current customers, growth is good but the price has to make sense.

Greenpants you are so full of Crap. Obviously you are an ass. I personally spoke to the stock room attendant and he told me exactly what he did when he sold outside Otis. Took the cost he was charged for the part and MARKED it up 500%. I worked at Otis at that time. That was in the 70's. So lets hear your bullshit again dumbo?

Thanks for sharing your opinion.

Just a fact no opinion at all.

Wow, GreenPants is spot on again, I KNOW how much we charge an outside customer versus inside at "O". 500%???- No way.

So long assholes!