Parts Markup Setup

Utilizing a parts matrix to markup your parts is one of the most important aspects in making sure your shop is profitable. Once you setup your parts matrix, you can set it to auto-apply to every part that is added to the estimate. This will streamline your profit on parts, make it less stressful for your service writers when trying to figure out the price point to sell a part at, and shorten the process of estimate building. 

We recommend setting up the parts matrix to give your shop a 60%-65% gross profit. Here is a great article by Ratchet and Wrench highlights the importance of setting up a parts matrix.

Tekmetric's Part Matrices and Markup features allows you to automatically mark up parts and earn better margins on parts. To get started:

1. Click the Shop Settings section on the bottom of the left menu bar.
2. Click the tab, MARKUPS.
3. Parts Markup table - here you will set up how you want to make profit off of your parts; you can create parts matrices or use the flat rate parts markup.

• Create Part Matrix
• Create Flat Rate Markup

Create a Parts Matrix

1. Click  NEW PARTS MATRIX  button to create a new parts matrix.

2. In the window that appears, type in 'Matrix Name'

3. Click ADD RANGE button to enter as many custom ranges as necessary and assign a markup to each range. Markup can be based on one of the three options:

• Multiplier - this method will multiply the unit cost by the multiplier amount to find the retail unit price. 
  • Example - if the range is $0-$5 with a multiplier of 3, then a part that costs $4 will be multiplied by 3 for the retail cost ($4 x 3 = $12 retail price)
• Gross Margin Percentage - this method will set the retail unit price to an amount that will achieve the desired gross profit margin % based on the cost. 
  • Example - if the range is $0-$5 with gross profit margin of 50%, then a part that costs $4 will be marked up to $8 in order to achieve a 50% profit margin ($4 ÷ 0.5 = $8 retail price).
    • You would sell the part for $8, but it cost you $4 to purchase, and so you are left with $4 profit, which is 50% of your retail price. 
• Markup Percentage - this method you will markup the unit cost by whatever percentage of profit you want to make.
  • Example - if the range is $0-$5 with a markup percentage of 50%, then a part that costs you $4 will be marked up to $6 in order to achieve a 50% markup of the unit cost.
    • You are buying the part for $4, but you want it to be marked up by 50% of what it costs, so 4 x 0.5 = 2. Then you add that markup to the cost of the part, 4+2 = $6 --- making $6 your retail price for the part. 

4. Pick whether you want this to be a simple or compound matrix on the bottom left.

Use table above for examples explained below

• Simple - this method finds the part cost within one single range and uses the multiplier selected to markup your part cost. 
  • Example - in the table above, if the part costs $8.00, then the full $8 will be multiplied by 2.  
  • $8 x 2 = $16 dollars. And so, the part retail price on this job will be $16 dollars. 
• Compound - This method allocates the part cost across each of the ranges within the matrix, using each of the multipliers within each range for the dollar amount in that bracket.
  • This method results in higher retail prices and is also known as "sliding" or "progressive" matrix. 
  • Example - in the table above, if the part costs $8.00, then the $8 part cost would be broken up to be multiplied as follows:
    • The first $5 of the $8 part cost will be multiplied by the first bracket
      • $5 x 3 = $15 dollars 
    • Remaining part cost from the $8 would be multiplied by the second bracket (8 - 5 = 3). 
      • $3 x 2 = $6 dollars
    • Add those together: 15 + 6 = $21 dollars. And so, the part retail price on this jobs will be $21 dollars. 
• For more information on the two types of calculations, visit Simple vs Compound calculation article.

5. If you want to delete a range, click the X icon to the right of the range you'd like to delete.

6. Once steps 1-5 are completed, click SAVE to save the labor matrix. 

KEY NOTES:

• You can create as many part matrices as you'd like.
• You can choose to make any of your matrices the "default" by checking the star icon.
• You can also make a parts matrix be auto-applied to every job in an estimate.

Example of Part Matrix from Tekmetric Shop Owner

Create a Flat Rate Parts Markup

1. Click the second tab 'FLAT RATE PARTS MARKUP' in the 'Parts Markup' table.

2. Pick your calculation method: fixed or percentage.

3. Markup your desired amount.

4. Click  "SAVE MARKUP"  icon to save the changes that have been made.