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Parts markup

Today I needed a window regulator replaced in a 2002 Bonneville. I took it to the shop and they quoted $330 for the parts and $89 for the labor. I thought the part seemed high so I called a dealer. The dealer quoted me $210. I brought this to the attention of the shop and after some irritated comments they agreed to match the dealer price.

I admit to being naive in thinking that shops generally charged for parts about what they cost them (or they got a shop discount and charged full retail). After researching these blogs I found that it is common practice for shops to mark up parts anywhere from 20% to 100% or more. I understand and love that this country has a free enterprise economy and that everyone needs to make a decent profit to provide for themselves and their families. But marking up parts seems to be a rather deceptive practice.

I think most consumers are like me and assumed that shops made most of their money off the labor charge. Most people understand and accept that a shop needs to make a profit and when they are charging $80, $100, or $120 an hour that their mechanics are not making that much. They need to charge more to cover overhead, profit, etc. I have no problem with that.

But for a competitive, free enterprise economy to operate efficiently, there needs to be a measure of transparency in order for consumers to make intelligent economic comparisons. Consumers can compare shop labor rates to help in making a rational economic decision, and it will not always be the lowest rate. I may decide to go with a shop with a higher labor rate markup because they are good at diagnosing problems, they fix it right the first time, don’t try to fix things that aren’t broken, etc. But it is hard to compare shops if you don’t know how much they are marking up parts and the markup can be anywhere from zero to double.

It seems that this is done intentionally because consumers believe that parts are a relatively fixed cost that the shop can’t control and consumers are more willing to pay for parts than for labor. You may say that the only thing that matters is the total cost, which is true. But then, why do shops quote the parts and labor separately?

Why do shops play this game? It seems that because consumers compare shop rates, but not parts costs because they have no context to compare parts unless they research it every time they bring something in. Most consumers don’t have the time to do this unless it is a major repair. If shops need to raise their shop labor rates to cover overhead and profit, it would seem to be more transparent and promote more efficient economic decisions in a free enterprise competitive economy. But that seems to be the point. Make it more complicated so consumers can’t do that.

Now I know this has been done for decades and nothing is going to change. You may say that consumers can compare shops on overall price, quality, etc., on a trial and error basis. But it seems like a expensive and inefficient way to find a good shop. And after you find a good shop after several bad experiences, what if you move and have to start the process all over again.

How about this. Don’t worry about how the numbers are determined. It’s not your job to determine that. What is your job is who you will hire to do the job. Does it really matter if they charge $1.00 for parts and $100 for labor or $100 for parts and $1.00 for labor.

How to find a good shop?  Start by asking your friends neighbors etc.  

Life is not perfect.  It's life.  It changes.

dealers our the worst highest labor rates and full list price for parts. i don’t know any shop still in working on cars today dont make something extra on parts .

Like politics, auto repair shops play a shell game to keep the public’s eye on the empty shell so that they always win. But the public seems determined to play that game so the politicians and shop owners oblige them. There are certainly plenty of crooked politicians and shop owners whose greatest talent is flim-flamming the public and the honest politicians and shop owners must compete with them for business. How can anyone be straight up with the public and remain in business or in elected office when they must compete with crooks.

If the public is lucky enough to find a well equipped shop with capable mechanics, run by an honest and ethical owner/manager it would behoove them to ask questions regarding markups and labor rates to “get on the same page,” and hopefully have a relationship that is financially beneficial to both. The public doesn’t really want to know what the uniforms and shop rags and parts washers and toilet paper cost on a daily basis but understand that they are paying for them just the same.

I agree with Joseph and Big Marc. Joseph’s advice is a good one to follow. Don’t worry about the price breakdown of a job…just be concerned with the total price. If it’s too high just go somewhere else.

Joseph is 100% correct.

Don’t worry about the price of the parts…or the labor cost. But worry about the overall price and the quality of the shop.

I wrote up an example yesterday in another thread…

Mechanic A charges $40/hr. Mechanic B charges $95/hr.

Mechanic A charges $440 to replace an alternator on a 2005 Honda Accord.
Mechanic B charges $295 to replace the same alternator on the same car.

They both charge only 1 hour to do the job and they both buy the part from the same parts store. But Mechanic A charges $400 for the part…and mechanic B only charges you$200 for the same part.

You have to look at what is a reasonable overall price to do the work. Some mechanics will play games with the numbers to make it seem like you’re getting a deal…but you’re not.

Transparancy ib a free market economy? You don;t understand capatilism. Does Apple tell you what it costs them to make an ipad?
Hore to the point, does your plumber or appkiance repair man sell you their oarts for what they oay for them? Just because someone is charging you for labor doesn’t entitle you to wholesale price on parts.
A good shop warrants both the part and their labor for a specified period.

As Consumer of products/services you do your homework to understand the prices.

Hmm. I just looked up a window regulator for your Bonneville. AC Delco Original Equipment would cost me $123.80 with a recommended selling price of $278.18. AC Delco Professional replacement would cost me $95.70 with recommended selling price of $200.97. Aftermarket replacement part would cost me $83.63 with recommended price of $177.20. You’re not the only one who’s confused about what the price should be. I’d use the mid-priced part to fix your car, not because of the price but because I could have it on hand in an hour instead of waiting until tomorrow. We don’t buy based solely on price, we judge using service and convenience as well.

We make money on parts because we have to. We make money on labor because we have to. We may charge the customer $90/hour to service your car but we don’t pay the mechanic that much. Frankly, it’s none of your business how much the mechanic makes, is it? So by the same token it’s none of your business how much we pay for the parts we use to repair your car, isn’t it?

If I could hand you a bill that says “Repair window–$320.00” I sure would. But bookeeping practices and state law mandates that every part sold be identified on the invoice with a part number and a price. Parts and labor must be separated because parts are subject to sales tax, labor may or may not be.

The price of the part may seem high in comparison but the labor charge doesn’t seem too high.
Granted, I’m not a pro GM guy and have no idea what the flat rate time is for a regulator on one of those nor do I know the locale which can have a big effect on labor rates.

It could be that the labor has been discounted a bit and the price of the part raised somewhat above normal for one reason; it’s often easier to justify the price of a part than it is to justify the labor charge to a customer.