At cost pricing on parts.

[cleb]

So I just started working at this computer repair shop, super happy about it, it's my first job of the type, congrats to me
Anyway my boss was mentioning about how they have a connection/ vendors/ ect where they can get parts at really low pricing.

He mentioned to me that "He can get parts basically at cost prices" and "Maybe you could get some things on the cheap too" Now I have a couple questions about this.

1. Is there something wrong with that? Like if you have a vendor and you give your employees the pricing, is that not allowed, or does it depend, are there laws being messed with ect.

and

2. If it's okay or its a weird thing but technically nothing is wrong ect, what kinda of pricing can I expect or have any of you guys had a situation like this have an idea of what I could be looking at?

 

Edit: I know there is a thing for pricing on here I just felt this encompassed a bit more broad of a situation. 

 

[suchamoneypit]

Its perfectly legal. I don't know if you know of a store chain called Best Buy but all employees only need to pay 5% over what it costs Best Buy to get items, so on certain items this discount can be huge (like charging cables and similar items with a very high markup, a $15 cable could cost an employee $1.50).

[GreezyJeezy]

if my boss let me get parts at the price stores buy them for i would not tell anyone and not question it. thats a hell of a deal.

[Mark77]

I started a computer store with a friend ~20 years ago, and he continued to run it until quite recently.  In a nutshell, there wasn't really much profit on the parts themselves.  Mail order acquisition of parts was almost always similar to buying them from the wholesalers like Ingram, Supercom, etc.  Retaillers like NCIX with huge volume forged direct  supply chains with some of the manufacturers, but even the margins have been significantly wrung out of that business model.

 

The money was made on service and repairs. 

 

If you're an eligible retailer, there are programs like Intel's "Retail Edge" which qualify employees to purchase certain kits of Intel parts for very cheap.  And occasionally a sales rep will throw freebies in with orders.  But I wouldn't expect to be able to, without the use of such programs, get things at a materially lower cost than you, as an individual, could order off of Amazon or pricematch with the various online vendors.   There just isn't really any margin in the business anymore. 

[LynxThe1st]

2 minutes ago, GreezyJeezy said:

if my boss let me get parts at the price stores buy them for i would not tell anyone and not question it. thats a hell of a deal.

Lmao, same

[GreezyJeezy]

4 minutes ago, suchamoneypit said:

Its perfectly legal. I don't know if you know of a store chain called Best Buy but all employees only need to pay 5% over what it costs Best Buy to get items, so on certain items this discount can be huge (like charging cables and similar items with a very high markup).

thats just a employee discount like every retailer in the world does that, and you still end up paying more than what the store buys it for

[cleb]

3 minutes ago, suchamoneypit said:

Its perfectly legal. I don't know if you know of a store chain called Best Buy but all employees only need to pay 5% over what it costs Best Buy to get items, so on certain items this discount can be huge (like charging cables and similar items with a very high markup).

I know about best buy having stuff like that.

 

3 minutes ago, Mark77 said:

I started a computer store with a friend ~20 years ago, and he continued to run it until quite recently.  In a nutshell, there wasn't really much profit on the parts themselves.  Mail order acquisition of parts was almost always similar to buying them from the wholesalers like Ingram. 

 

The money was made on service and repairs. 

 

If you're an eligible retailer, there are programs like Intel's "Retail Edge" which qualify employees to purchase certain kits of Intel parts for very cheap.  And occasionally a sales rep will throw freebies in with orders.  But I wouldn't expect to be able to, without the use of such programs, get things at a materially lower cost than you, as an individual, could order off of Amazon or pricematch with the various online vendors.   There just isn't really any margin in the business anymore. 

So I guess it's okay but maybe I just have to see if the pricing is worth it? I mean I figure when I get to take advantage of prices I will know, I was just worried about the "okayness" of it and if it was worth it. 

[Mark77]

1 minute ago, cleb said:

I know about best buy having stuff like that.

 

So I guess it's okay but maybe I just have to see if the pricing is worth it? I mean I figure when I get to take advantage of prices I will know, I was just worried about the "okayness" of it and if it was worth it. 

I think you'll be shocked at just how little your company makes, after it pays its employee expenses, rent, etc., when they sell a PC.  There's a reason why lots of computer shops have closed over the past number of years. 

[suchamoneypit]

1 hour ago, GreezyJeezy said:

thats just a employee discount like every retailer in the world does that, and you still end up paying more than what the store buys it for

but its completely relevant to his question? I said right in my reply how much you would pay, and thats 5% more than what the store pays for all items. 5% above the store cost is nothing, thats pretty much getting it for at-cost.

[GreezyJeezy]

1 minute ago, suchamoneypit said:

but its completely relevant to his question? I said right in my reply how much you would pay, and thats 5% more than what the store pays for all items. 5% above the store cost is nothing, thats pretty much getting it for at-cost.

stores sell shit for more than just +5%

[suchamoneypit]

Just now, GreezyJeezy said:

stores sell shit for more than just +5%

I think your are misunderstanding what I said or saying. If you are an employee of Best Buy, you get to buy any item in the store, for 5% above what it costs the store to buy it. So if the store buys a USB cable for $1.00, and they sell it normally for $10, as an employee you can buy this cable for only $1.05

[TopDollar]

As others have said, it's completely legal as long as it is done in accordance with IRS regulations. One thing to watch out for is that per IRS Publication 15-B (Employer's Tax Guide to Fringe Benefits), the max limit which can be excluded from wages (for an employee discount) is 20% of the price they charge nonemployee customers for the service. 

 

Meaning if you are able to get a 30% discount on an item through your employee discount, 10% has to be considered wages and you have to pay income tax on that. In the case of Best Buy employees, the company handles this for you and it shows up on your pay statement. This of course is how it is supposed to work. In reality, this "discount" is probably not officially listed as an employee benefit at the shop you work at.

 

https://www.irs.gov/publications/p15b/ar02.html#en_US_2016_publink1000193672

[Mark77]

18 hours ago, cleb said:

So I guess it's okay but maybe I just have to see if the pricing is worth it? I mean I figure when I get to take advantage of prices I will know, I was just worried about the "okayness" of it and if it was worth it.

Intel RetailEdge deals are usually very good.  Good enough to want to make friends with someone who works at an eligible computer store, if you don't. 

[AshleyAshes]

57 minutes ago, Mark77 said:

Intel RetailEdge deals are usually very good.  Good enough to want to make friends with someone who works at an eligible computer store, if you don't. 

A friend who worked at Best Buy loaned me their Intel Retail Edge account in Nov 2013 and I'm loving my i7 Extreme 4930K that came to $250 CAD after shipping, exchange and duty.