In appliance service, parts distributors sell to the same homeowners that repair companies serve, with manufacturers' endorsement, so a servicer who charges more than the customer's list price looks like a gouger, even though the purchase price is only part of the true cost of supplying a part. Doug Major says this is why the old 25% parts markup collapsed and why shops moved to flat-rate and Blue Book pricing, which he dislikes because the customer can't see what they're paying for. He argues the trade needs its own guardrails and advocacy to fix it.
I have to compete with my partner, the parts supplier. And if you’re an appliance servicer, you do too. It’s quietly killing margins and burying transparency, as servicers try to engineer workarounds to a problem we didn’t create.
Where did this problem come from?
It comes from the same empty chair I talked about in Who speaks for the fly: the missing structure, the missing advocacy, the missing guardrails.
I don’t know of another trade so fractured it can’t advocate for its own well-being. But here we are.
The HVAC industry doesn’t allow suppliers to compete with contractors. The hairdressing industry doesn’t allow suppliers to compete with stylists.
But the appliance service industry does, and manufacturers endorse it.
What happens when the supply chain consolidates?
When any industry consolidates its supply chain, certain predictable things happen. Wholesale and retail pricing converge. Stocking incentives disappear. And servicers lose the margin that used to fund transparency.
Today, North America effectively has one dominant parts distributor with the manufacturers’ blessing to set prices and shape the margin environment.
That’s not a conspiracy. That’s just economics.
And it’s the reason the old 25% parts markup rule collapsed. It’s the reason servicers retreat into flat-rate pricing. It’s the reason transparency becomes impossible. Not because servicers want opacity, but because the structure makes transparency unsustainable.
This isn’t tin-hat territory. This is what happens when incentives drift far enough from technician reality.
How did I find out I was losing money on parts?
Years ago, sitting down with our firm’s accountant, he gave me the stunning news. “You’re losing money on every part you sell. Every one!”
I protested. We use the industry’s standard suggested retail price, and our price is discounted from that, so we have to be making money.
“No,” he said. “You are just not losing as much as you would be if you sold the part for less than you paid for it. What you don’t get is that the price you pay is only a portion of the actual input cost.”
Suddenly I knew I was competing with the parts supplier. Because if the customer checked the list price and I charged more than that, I was gouging them. Scamming them. Cheating them.
I was angry at the very realization, because I thought I was the volume customer, buying tens of thousands of dollars a month in parts. Again, my supposition was wrong. One retail customer is a drop in the bucket. But thousands of retail customers a month, paying even ten percent more than I did? Suddenly my business was minuscule. I was the flea on the dog. Totally unfair.
Why does Blue Book pricing exist?
When you have a situation that threatens an industry, the survivors must find a way around it. Blue Book pricing is one of those ways. It makes it impossible for the customer to know what they are truly paying for in the parts price they see.
Personally, I hate its manipulative, non-transparent nature. I have campaigned against it. And yet I know why it’s there.
Just another sign of a broken industry that fixes everyone else’s problems but can’t fix itself.
What do we owe the customer, and can we still deliver it?
When I started Vantage Appliances Inc., a customer sat me down. Among other things, he told me: you have to be profitable enough to stay in business, and you have to do good work. That is the contract you make with me.
I have kept my end of that contract. But the industry as a whole is structurally deficient enough that we cannot deliver on that promise. Barely today, and unlikely tomorrow, unless our parts distributors quit competing with us and quit buying up the trade organizations that could lobby against them.
Until the trade builds its own guardrails, we’ll keep competing with our own supply chain.
That’s the real story. And it’s time we talked about it.