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What markup does a yard make on a whole compared to the sum of its parts? For example an electric motor vs the steel and copper, is the profit margin the same or do they make more/less with them broken down and sorted?
Or Is there an incentive for them to buy stuff I broke down over buying the whole? Or vice versa? Factoring in quotas and everything.
Trying to negotiate the best prices I can, and the one with the most info usually wins... Thanks
Think of it like this - What would you tell them if they asked what profit margin you make on the same stuff?
The way we usually think about it is like this.
Gross Margin = Labor + Freight + Net Margin
Obviously, in business there are other costs, but these are not usually influenced by the customer as much as they are by managements decisions.
So, if you take that equation, and do some of this work for me, I will be willing to accept a lower Gross Margin. If you take Dirty Extrusion and clean it up, I am not going to charge you via - pricing, for the work I will have to do to clean it up. If you bring it to my facility, without me having to go pick it up, I will not charge you via-pricing, for all of the freight part of the equation.
If you deliver very clean material to a Scrap Facility, any buyer in their right mind will reduce their margin to buy your material, because at that point they just become a collector ad packager of the material.
motors are not profitable to be broken down domestically. that's why they are a good export item . the cost of labor is far to high here. I don't know of any yards in my area that break down motors completely.
speaking of how much do yards make on electric motors ?. Im guessing .15 to .20 cents. for example if a yard buys motors at .20 a pound do they sell em for .40 a pound ?
I'm not sure why it matters. Rather than worrying about what a yard is making you are going to be far more sucessful if you figure out what YOUR profit margin is on whole motors vs. taking apart motors, compressors, stripping wire, ect...
If you are unhappy with the price, you can always shop around and you will get a better price. You may have to ship them 300 miles but there will be a better buyer. You could then cut out the middle man (yard) and get their pricing which may be lower than you think.
Don't step over a dollar to pick up a dime......
I am looking to buy sealed units from a local yard and I wanted to know rough numbers to help in the negotiations. They make a profit on the sealed unit, sell it to me, and then make a profit on the copper and steal that I bring back. I think it's a win win for everyone, but I still want the best price... They buy them for .12/# and if they sell them for .28 I can't compete, but at .20 it would be worth if for everyone... Hence my question is the profit margin higher for whole or raw materials?
it's pretty much always higher on separate materials...the issue sometimes is the amount of LABOR involved to separate...sometimes it doesn't make sense.
As far as negotiations....don't worry about their profit margin, all you have to worry about it yours. WHAT can you pay and still make the margin you want/need to in order to make buying, transporting or whatever the item in question....ie I don't break down certain ewaste because I have set my hourly rate at like $50/hr and NO WAY I can get that doing certain things...know your number and then start low, see WHAT they say, if they blow you off, tell them to come back with a number...NOW you have info, if it is CLOSE to your number then you can probably just say...look I can't pay that, but I CAN pay X. If it is lower than your top number, then congrats, you already won...but don't just say yes, try to get a bit off. If the number is REALLY high, then just say... WOW...that's quite a bit...who in the heck pays that? I NEED THEIR NUMBER! LOL.....some will try to shoot for the moon. Tell them there is no way you can do that number and say how about this (go in about 80% of your top)....if they balk, say "look, heres the deal...this is the final amount I can pay, that should save us some time....I can do $X, not a penny more....what do you think?" If they still say too low, then you did your best, thank them and tell them other stuff you buy if they don't buy it (say ewaste) and then walk...
I have done sales for over 20 years....this is the way the game is played.
Good luck!
It's all about volume and + or - labor cost and we cant compete in the world labor market on a large scale.
Well I started a small nonferrous scrap yard for a nonprofit this year and our margin without including labor is about 19%. We sell to a larger yard who sell to the mills. Since I have talk to the mills on certain prices and follow the spot price I'm pretty sure my buyer is figuring about a 15% gross margin when giving me my prices. I think the industry runs petty tight margins overall.
Rod