“mark up” is a completely irrelevant term and the math to get to RETAINED GROSS PROFIT -RGP- is misleading when refering to profit.
Some of youalls words here like ‘profit margin’ are closer to the RGP more accurately figured as discount from selling price. When you have only the cost to work from and don’t yet know the selling price, that’s where the math looks misleading. But in the end it’s the RGP that is your operating profit.
What is 40% RGP ?
Of ALL the money the customer spends on the parts, we only KEEP 40%.
All the rest goes right out the back door to the supplier.
If the shop paid the same eight bucks that you could have ( but you didn’t go get your own fluid ), then they would naturally mark it up for profit. 40% RGP is not that high but is on our high side, we can live with less sometimes. For example, Ford’s suggested list price on most hard parts is a 40% RGP. But my selling price of transmission fluid leaves only a 25% RGP.
One cannot stay in business by giving away parts at zero profit.