Strategic Parts Multiplier System
The idea behind Strategic Parts Pricing is to assure that our company produces a reasonable gross profit on all parts and materials sold thru its service department. Due to the fact that our overhead is higher (as a percentage of sales price) for low cost parts, we must mark-up these parts higher to produce the same reasonable net profit. The rational for this is simple: Lower priced parts typically do not have a manufacturer’s warranty and if they did, the part is usually not returned for credit upon failure. Low priced items also have a tendency to disappear from inventory and are more likely not to get recorded or charged to customer invoices. This policy is for the service department only.
Please use the following table to find the proper retail sales price of all repair parts and materials. Simply take the wholesale cost of the item and multiply it by the following multiplier. Then round the result to the next highest dollar.
Example: You have a gas valve that cost you $26.00 at the local supplier. To find the proper retail-selling price: Multiply $26.00 by 3.375. The answer is $87.75. Round this number to the next dollar. Your price is $88.00.
| Price Range | Multiplier | Price Range | Multiplier | |||
| $0.00 | $0.49 | 6 | $80.00 | $89.99 | 2.5 | |
| $0.50 | $0.99 | 5.75 | $90.00 | $99.99 | 2.3332 | |
| $1.00 | $1.49 | 5.5 | $100.00 | $139.99 | 2.2499 | |
| $1.50 | $1.99 | 5.25 | $140.00 | $169.99 | 2.1666 | |
| $2.00 | $2.49 | 5 | $170.00 | $199.99 | 2 | |
| $2.50 | $2.99 | 4.75 | $200.00 | $239.99 | 1.855 | |
| $3.00 | $3.99 | 4.5 | $240.00 | $269.99 | 1.8225 | |
| $4.00 | $4.99 | 4.375 | $270.00 | $299.99 | 1.7862 | |
| $5.00 | $5.99 | 4.25 | $300.00 | $349.99 | 1.75 | |
| $6.00 | $6.99 | 4.125 | $350.00 | $399.99 | 1.725 | |
| $7.00 | $7.99 | 4 | $400.00 | $499.99 | 1.6875 | |
| $8.00 | $8.99 | 3.75 | $500.00 | $749.99 | 1.6 | |
| $9.00 | $9.99 | 3.625 | $750.00 | $999.99 | 1.55 | |
| $10.00 | $19.99 | 3.5 | $1,000.00 | $1,499.99 | 1.5 | |
| $20.00 | $29.99 | 3.375 | $1,500.00 | $1,999.99 | 1.45 | |
| $30.00 | $39.99 | 3.25 | $2,000.00 | $2,999.99 | 1.4 | |
| $40.00 | $49.99 | 3.125 | $3,000.00 | $4,999.99 | 1.35 | |
| $50.00 | $59.99 | 3 | $5,000.00 | $9,999.99 | 1.3375 | |
| $60.00 | $69.99 | 2.75 | $10,000.00 | $24,999.99 | 1.3333 | |
| $70.00 | $79.99 | 2.625 | $25,000.00 | $49,999.00 | 1.33 | |
Strategic Pricing Exceptions
In order to ease customer concerns with regard to the pricing of common and easily accessible parts, we will use the following reduced multipliers for the parts stated. Generally speaking: The more sophisticated the part, the higher the gross profit margin. The least sophisticated and most commonly available components generally warrant a lower gross profit margin.
| Description of Component | Alternative Retail Price |
| Pilot Safety Switch (old name: Thermocouple) | $ 19.95 |
| Hot Surface Igniter | $ 39.95 |
| Refrigerant | $ ?.?? |
| Disposable Air-Filters | x 2.00 |
| Electronic (set-back) Thermostats | x 2.00 |
| Standard Thermostats | x 2.00 |
| Oil nozzles (oil furnaces) | x 2.50 |
| x | |
| x | |
| x | |
| x | |
© 1996-2013 by Mr. HVAC LLC and James R. Leichter
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