When do you charge for heavy duty shop supplies? Running a shop involves the use of a lot of consumables, like cleaning agents, shop towels, and other miscellaneous supplies. It’s important to understand the actual cost of these consumables and charge for them.
You may not be able to pinpoint the exact number of shop towels related to a job, but you still need to be made whole for that cost. That is where the heavy duty shop supplies fee comes in.
Methods of Calculating Heavy Duty Shop Supplies
Here are a few methods shops use to charge for shop supplies:
- Calculate as a percentage of labor
- Calculate as a percentage of labor and parts
- Put a ceiling and floor on what you charge
Charge as a Percentage of Labor
The most common method for calculating shop supplies is to charge it as a percentage of total labor on a service order. For example, 8% of labor. If the total labor charge is $500, shop supplies would be $40.
If the intent is to recapture the cost of consumables used on a job, labor is a pretty good measure, because the longer a job goes, the more supplies will use.
Charge as a percentage of labor and parts
Some shops calculate supplies on both labor and parts. To end up with a reasonable charge, this usually means the percentage is lower. For example, 5% of labor and parts. If total labor and parts is $800, shop supplies would be $40.
The problem with this method is that for services with big-ticket parts but little labor, the supplies charge gets unreasonable. And for services involving few or low-cost parts, but a lot of labor, the charge isn’t quite enough.
Put a ceiling and floor on what you charge
Regardless of the calculation method you choose, you might want to have a minimum, and even a maximum, that you charge for supplies.
A maximum, or ceiling, can be a way to keep charges reasonable, especially if you are charging based on labor and parts. A minimum, or floor, can ensure you at least recoup some basic costs on every service.
Charging for heavy duty shop supplies makes you whole on real costs in your business. No matter which method you use to calculate the charge, make sure you are keeping the charge reasonable.
If you need software that can handle any of these shop supplies approaches, hit us up for a demo of Fullbay below.