Profit margin

Discussion in 'Maintenance Bay' started by Tom-D, Apr 13, 2019.

  1. Tom-D

    Tom-D Taxi to Parking PoA Supporter

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    Where did I chastise anyone?
    When you hire an Independent A&P to over haul your engine would you expect them to put 15-20k on the work order then hit you with it?
    I don't know any A&Ps that will do that. because 1 guy that would stick them with the bill would bankrupt them>
     
  2. EdFred

    EdFred Touchdown! Greaser! PoA Supporter

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    While I haven't had a full overhaul done, I have done exactly that with my A&P. I think the biggest bill I got from him was $8000ish.

    Maybe not chastise but your condescending "finally an answer." Maybe your first post should have said only for labor what would you pay.
     
  3. IK04

    IK04 Line Up and Wait

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    I completely understood your question and was annoyed by all the non-answers. I had to respond to get some resolution.

    Was I very far off?

    :rolleyes:
     
  4. 1RTK1

    1RTK1 Cleared for Takeoff

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    What is your time worth per hour Tom as a mechanic?
     
  5. Lndwarrior

    Lndwarrior Pre-takeoff checklist

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    He said "profit" in his original post. That clearly does not include parts cost.

    He also said this question was vague in his original post.

    I guess a certain group on here just like to bash Tom, no matter how benign his post is.
     
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  6. airdale

    airdale Pattern Altitude

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    @Bell206, I do small business mentoring with SCORE. Here is a way that I suggest my clients look at their businesses:

    There should be two cash streams from the business. First, the owner(s) should be paid market rate for the job(s) that they are doing. In the case of an A&P what would he/she expect to be paid if they went out in the job market and got hired? Second, the owner(s) should be paid a fair return on their cash investment in the business. For investment in land and buildings, if any, a return of maybe 9% would be appropriate. The rest of the investment a small business is a fairly shaky proposition so the investment should earn based on its risk, maybe 25%.

    We tell people that if they only get what they'd get as someone else's employee and they do not get any return on their investment is that they've "bought themselves a job."

    Note that this model does not consider revenue or net profit directly, but of course you have to have both in order to generate the owner's income. Also, in cases where the business cannot generate the cash to pay both streams, the difference should be considered and booked as a loan from the owner to the business or as an equity contribution to the business. That loan or equity should in the long run generate a return to the owner as well. (Cash shortages in small businesses are not uncommon. investments in plant & equipment and increasing accounts receivable are common things that eat cash.)
     
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  7. Tom-D

    Tom-D Taxi to Parking PoA Supporter

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    No It is starting to sound like you take every thing said as an insult.
    You blame me for being condescending and chastising. And I never did either.
     
  8. Tom-D

    Tom-D Taxi to Parking PoA Supporter

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    Its only worth what a customer is willing to pay, thus the conversation.
     
  9. Bell206

    Bell206 Cleared for Takeoff

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    Thank you for taking the time and supporting SCORE. I've had a number of SCORE mentors over the years as I dabbled in different ventures. And being able to sit down, face to face, with a "titan" of industry was the best decision I ever made. But I was lucky as I had a day job that paid good and provided a lot of free time to pursue (and fund) my side ventures. I was also lucky that 2 of my mentors were aviation oriented which really helped. My answer above was merely a summary to the general discussion.

    Since my situation was unique as I had a cash flow from the day job, I tended to pursue niche markets that most A&Ps or small shops didn't offer which tended to be riskier, but more profitable...provided they worked. In my aviation work, it was easier for me to track net profit as some of the cash investments (mostly specialized equipment) were difficult to turn into a direct return due to the nature of the business. However, I ran my non-aviation business close to what you have suggested as it was more conventional.

    It worked out in the end and I had a great time doing it. Had the cost of insurance not went through the roof, I'd probably still tinker on aircraft since I retired from the day job 5 years ago. But with everyday Saturday now, it's tough to get back into the groove.:)
     
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  10. Tom-D

    Tom-D Taxi to Parking PoA Supporter

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    I would hope that 8k bill was not a surprise.

    would you pay $5k labor fee half up front and half when completed?
    plus any costs that the A&P occurred in your behalf will be added to the last half payment.
    and you buy all parts on your CC
     
  11. PaulS

    PaulS Final Approach

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    No, no, no, no Tom, customers can really suck. You need to figure out what you need to make to not lose your shirt and to make it worth your while. Then communicate the conditions of your price or rate and estimate of what it will cost. If the customer wants to haggle, that's up to you. Sometimes it's better to let a problem walk away. If you are fair, you'll get the work, except from the jerks, better to weed them out up front.
     
  12. Tom-D

    Tom-D Taxi to Parking PoA Supporter

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    That's kinda what I do already,, this is more of what the market will bare.

    I don't have sucky customers, they are too easy to spot.
     
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  13. Dave Theisen

    Dave Theisen En-Route PoA Supporter

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    You GUESS? :)

    That’s been a long standing tradition here on PoA.
     
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  14. Tom-D

    Tom-D Taxi to Parking PoA Supporter

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    Yeah, some days you're the bat, some days you're the ball.
     
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  15. 1RTK1

    1RTK1 Cleared for Takeoff

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    Since you don't (I assume) have a business, shop, etc. with overhead, it would be by an hourly rate of what local A&P's charge per hour or are paid per hour, not shop rates......

    You should be used to being the ball by now;)
     
    Last edited: Apr 15, 2019 at 5:55 PM
  16. EdFred

    EdFred Touchdown! Greaser! PoA Supporter

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    Not a surprise. Knew it was coming. And I have paid some up front in the past. Not on that one but when the A&P was getting started and wasn't as liquid as he is now.
     
  17. Tom-D

    Tom-D Taxi to Parking PoA Supporter

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    You didn't answer the question.
     
  18. 3393RP

    3393RP Pattern Altitude

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    No kidding.
     
  19. Checkout_my_Six

    Checkout_my_Six Final Approach

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    Didn't you say you were giving it all up...and retiring? o_O
     
  20. EdFred

    EdFred Touchdown! Greaser! PoA Supporter

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    Yes I did. Read slower.

    I would hope that 8k bill was not a surprise.
    Not a surprise. Knew it was coming.

    would you pay $5k labor fee half up front and half when completed?
    And I have paid some up front in the past. (Since my AP continued to accept work from me, any sane person would assume that I paid the entire bill)

    How is that not answering the question?
     
  21. Tom-D

    Tom-D Taxi to Parking PoA Supporter

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    I didn't see a "Yes" in there anywhere.
     
  22. Checkout_my_Six

    Checkout_my_Six Final Approach

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    Tom....are you profitable? ;)
     
  23. EdFred

    EdFred Touchdown! Greaser! PoA Supporter

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    How is "I have" not an answer in the affirmative?

    Do you have undisclosed cognitive deficiencies?
     
  24. Tom-D

    Tom-D Taxi to Parking PoA Supporter

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    Don't try to blame me for your reluctance to answer the question.
    Would you or would you not pay the 5k labor fee?

    An old Saying,, "Try to be cute, end up looking stupid."
     
  25. Checkout_my_Six

    Checkout_my_Six Final Approach

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    So....what does it profit a man to gain the world?.....yet lose his soul? ;)
     
  26. Tom-D

    Tom-D Taxi to Parking PoA Supporter

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    That's kinda true,, who really gives a rat's A--34
     
  27. Checkout_my_Six

    Checkout_my_Six Final Approach

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    No....totally truth, you can live by. ;)
     
  28. EdFred

    EdFred Touchdown! Greaser! PoA Supporter

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    I already answered the question in the affirmative. I can't help that you don't understand the concept that "I have already done that" is a past tense answer of yes.

    It's like asking a currently married person "would you ever get married?" and them answering "I have."

    You have some serious cognitive issues if you can't figure out that "I have" is an answer that not only affirms "yes" but that's it's already ****ing been done.
     
  29. danhagan

    danhagan Pattern Altitude

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    Sometimes customers pay, are ****ed off on the price, say nothing and never return.

    Looks like someone guessed 30-36 hours earlier. Multiply by the amount per hour for your area, and you have your answer (looks like 4-5 k or about 250k a year if you can do an engine a week).

    We have mobile A&Ps in my area, so no overhead costs