The parts racket

[Thomaspin]

Shopping for some new front wheel bearings for the 1983 300SD, I thought I would take a few moments to check prices from various sources. The results are mind boggling.

The SKF reference numbers for the inner/outer front bearings are LM48510/M12649.

Bearings are made by many manufacturers - some of the better known ones are SKF, Timken, Koyo, NTN, FAG and are frequently interchangeable if you can get the cross-reference list.

Here are the results for one pair (all SKF except Napa):

Dealer (per FastLane) $66.35
FastLane $24.11
Napa $10.48 ('Powerglide' PGBPBR5/3)
********.com $ 8.76
AWBearings.com $ 7.03

Now, assuming AWBearings makes a 25% margin, their cost is $5.62, giving a dealer mark up of 1,080%.

Guess where I bought mine?

Caveat emptor.

[1994C220]

I too have priced many parts at the dealer...I usually use this little formula to figure out what the part will actually cost me:
a= dealer price
c= actual cost

a(.25)=c

Yep, 75% markup....thats what I usually see...

I went in and bought a map light bulb for my s class, thinking how much could they possibly mark up a bulb....

The bulb was 16.00!!!!!

I nearly hit the floor....a .59 cent bulb...

Oh well, i guess part of the mark up revolves around having each part blessed by Mercedes as it enters the part shop....Id love to see what they actually pay for this stuff.

[csnow]

"commodity" items like bearings, bulbs, wipers, brake parts, glass, etc, always have the most apparent markups.
That is because these parts are either standardized, or sell with enough volume to create 'economies of scale' and draw competition into the supply lines.
Dealers are generally forced to use the 'factory' distribution channel, which is protected from normal market forces. Even if the OEMs are producing the exact same part without stars on them for 1/3 the price...

[william rogers]

"Whatever the market will bear" I learned when selling my silver jewelry that if an item did not sell that somtimes doubling the price worked like a charm, A couple of years back I got a full size older Craftman band saw out of our local dump.The main shaft bearings were shot, I looked them up on Sears parts web site and they wanted 75.00 dolars for them, I took the old bearings to Bearings INC. in Eugene and got both for 11.50 ,saw works great. Industrial supply houses are a wonderfull source for many things including tools,for example you can buy machine shop quality drill bits for about the same price as those sold in the big so called discount chain stores ..........
William Rogers......

[stevebfl]

For a little added perspective.

Many dealers add to list price through a system called matrix pricing. As it turns out many MB items like bolts, bulbs, belts, etc. are often the cheapest one off pricing going. That is only till the matrix pricing hits. The concept behind Matrix pricing is parts up to 10 dollars get jumped 5 times, stuff to 20 gets 4 times stuff to 30 gets 3 times, stuff to 50 gets 2 times, etc., etc,. The numbers aren't always the same from matrix to matrix. Anyone can creat there own matrix as I just described. BTW I have never seen a Matrix as high as I described but it would take such to explain prices quoted in this thread.

To justify this concept one must understand the value of skilled people. When you go to the parts counter and buy a bulb that has a MB list of 2.10 (part # 072601-012120 Dome light bulb 140 chassis Oshram number 6411). If I buy this part from MB they sell it to me for 1.51 and the dealer pays 1.20, unless they buy on a stock order which gets another 10% and at the end of the year maybe some more kickbacks if they do a certain volume.

So now you drag your important self down to their parts counter and wish to have this part specified and writen up. Do you expect that dealer to waste ten minutes of a parts counterman's time doing this for $.90. Get outa town.

[Thomaspin]

.....but 1,080% margin?

I'm reminded of Joseph Welch's famous words when he was cross-examining Joseph McCarthy's lawyer, Roy Cohn, when McCarthy tried to impugn the integrity of another lawyer at Welch's firm:

"Have you no sense of decency, sir? At long last, have you left no sense of decency?"

1,080% impugns my sense of decency.

[mbdoc]

To put parts pricing into perspective take a look back into history!!
IN 1969 a Chevy Impala listed for $3500. & all of the replacement parts listed for $52,175 (unassembled)!!

[stevebfl]

As to the bearing price. Are we calling apples oranges here. You have described a bearing by dementions. Are you aware of the term precision roller bearing. Just within the size specifications there are standards of tolerance. Beyond this is the metal alloying and type of hardening.

Are we really sure that apple is such.

[haasman]

Having worked for two automobile manufacturers in the past, I can say that some of the wilder prices do not come from the dealers, often they are created by the OEM manufacturers and the retailers will simply charge their retail price.

When working for these companies, as part of our work, we would quarterly, at the behest of the parts reps, look at particular parts pricing and do comparisons to competitive and non-competitive makes.

For an example, a particular car had a fender price that was three times more expensive than a competitive car. The factory worked through to margin average the parts price. Then again in another comparison, a windshield was $125 less than an "economical" import and the price was raised.

We learned that certain landed parts costs were insanely priced for a variety of reasons. Often, beyond the uniqueness or its value. Typically if a part can only be sourced from manufacturer, then its price is going to reflect that, but within reason. Some parts when associated with important structural features (safety for an example) and liability issues, would be priced more.

The cost of the infamous illuminated sun visors .... everyone knew they should cost about $30, but were being sold for $350! Over a period of time most manufacturers not only matrix prices, but also look a volumes and finally a realism test. This is what finally brought the $350 sun visors down.

The after market and the grey market competition really woke up a lot of European manufactures in the late 80s and early 90s. Although there are many views and sides to the grey market parts systems, generally it can be said that external part supply competition has brought prices on a lot of parts back into line. But not all ...

The quality of the parts also played an important role. If the part was going to be installed, would it survive the common 6 months or 6,000 repair service warranty, not to mention meet all performance criteria.

I have no axe to grind here, I do not work for any manufacturer of automobiles any longer. I thought I would simply share a bit of an inside view into the true pricing process.

[Thomaspin]

I am using the same parts number that is disclosed on the Worldpac photos on the FastLane web site. Are you suggesting there is more than one SKF part with the same number?

[stevebfl]

I am suggesting that there is more to proper ID than the size description on the bearing. I know of some of the differences but I can't tell you where they matter or when they apply.

I know that if you get that SKF bearing in a MB box it will be fully described.

You have picked one part to do this expose on and you are probably right in this case. I buy nuts and bolts and bulbs from many vendors. The only time I get significantly better deals on small quantities is if I buy lesser quality or "unknown" quality.

But I always buy in long term volume that keeps me from paying "Matrix" pricing.

[Thomaspin]

Actually, I owe you double thanks as it was your original post which pointed out that it was the contents not the labelling which mattered, and got me to researching all of this.

My thirty minutes of Googling saved me some $118 for the front axle set. Now if I could make $236 every hour of the working year, I could probably afford the MB box, too, not to mention retiring early!

Sadly, amateurs like me do not command the pricing power of the pros like yourself. I suspect most of the folks on this board find themselves in a like situation.

Thanks again for the lead.