Making Money by Adding the Right Markup?

Every business adds a profit margin onto every product they sell. If a business does not have a high enough profit margin, they would not stay in business very long. Some profit margins are simple, like selling a lock or duplicating keys. Other profit margins are more complicated such as selling originated keys, cloned keys or programmed keys.

Profit margins can be determined in different ways. The long way is to calculate all of the costs of doing business, from that determine how much money needs to be made per dollar cost, and come up with the percentage.

The short way is to add either an educated guess dollar amount or a percentage of the cost. An educated guess can include price shopping or input from a distributor and/or a manufacturer.

For example, a one hundred dollar cost item, some locksmith add thirty to fifty percent. Others will add a dollar amount. Remember the 99 cent rule. Never set a price as just a dollar amount. Always have it less, adding cents to the cost. $14.99 is a much better price than $15.00.

How does volume affect your profit margins? If you sell one item, will the profit margin be larger than if you sell ten, twenty or one hundred?

Does your profit margin change if your customer can find a price on the Internet?

Does the profit margin change for new versus existing customers?

The price of your service call should take into consideration time, cost of vehicle operation and your profit margin. How much does your service call change by distance, the time of day and/or the day of the week?

Let us know what you do.