Work out parts markup instantly with clear inputs, formula shown and shareable results.
Parts pricing must start from landed cost — purchase price plus freight and handling — with a provision for warranty returns, then gross up to the target margin. Pricing from invoice cost alone systematically under-recovers on any part that has to be shipped in.
Landed cost
Landed = (Part cost + Freight and handling) x (1 + Warranty provision %)
Selling price
Price = Landed cost / (1 - Target margin %)
25-40% for automotive and appliance service, higher on low-value fast-moving consumables and lower on high-value branded components.
Because a proportion of parts fail within the warranty period and are replaced free. That cost has to be priced into every part sold.