Parts Matrix pricing is a method used where you take a part's initial cost and multiply it by a certain amount to come up with the selling retail price. In Tekmetric, you can create custom matrices to calculate the part retail price.
There are two calculation types of matrices that help mark up a certain cost price or rate - simple or compound.
Below are the differences between a simple matrix and a compound matrix.
Please refer to table above for the examples explained below.
Simple Matrix - the part cost is marked up by a certain amount within one range of the matrix. For an example, your part cost $25. Looking at the table above, if this was a simple matrix, $25 falls into the 3rd range, which is marked up 150%.
NOTE: multiplier = gross profit = markup. They are just different ways you can view and interpret your profit.
For this case: $25 x 2.5 = $62.50 would be the part retail price if it was marked up by a simple matrix calculation.
Compound Matrix - the part cost is broken down and marked by within each range of the matrix. For an example, your part cost $25. Looking at the table above, if this was a compound matrix, $25 will be marked up like this:
- First $10 of the $25 is marked up by the first bracket (markup 250%)
- $10 x 3.5 = $35 dollars
- Second $10 of the $25 is marked up by the second bracket (markup 200%)
- $10 x 3.0 = $30 dollars
- The last $5 of the $25 part cost is marked up by the third bracket (markup 150%)
- $5 x 2.5 = $12.50 dollars
For this case: Adding all the markups together, you get $35 + $30 + 12.50 = $77.50 would be the part retail price if it was marked up by a compound matrix calculation.
With a compound matrix you will on average make about 8-10% more profit than a simple matrix. Ideally you create the compound matrix with high markups on low cost, and a low markup as part cost gets higher.