How parts are priced, and what the contract says about it

Coverage decides whether a part is chargeable. The pricing clause decides what it costs. The second question is asked far less often than the first.

Updated 2026-09-26 · 5 min read

Once a part is established as chargeable, most people stop reading. But a part you genuinely owe can still be billed at the wrong price, and unlike a coverage dispute this one is settled by arithmetic rather than interpretation.

Four ways a contract prices parts

  • At cost. The vendor's documented acquisition cost, with no margin. Rare, and normally paired with a higher labour rate.
  • Cost plus a percentage. The most common arrangement. The percentage is stated, which makes it checkable — if you ask for the cost.
  • Manufacturer list price. A published figure, usually the highest of the four, and the one to watch on a cost-plus contract where cost has quietly become list.
  • A contract price list. Agreed prices for common parts, attached as a schedule. The best arrangement for you, and the one most likely to be ignored a year later.

Where the contract says cost plus a percentage, you are entitled to see the cost. A vendor unwilling to evidence it on a significant part has told you something.

Core charges and returned parts

Many major components — compressors, motors, control boards — carry a core charge that is refunded when the failed unit is returned. The technician takes the old part away, the vendor claims the core credit, and the credit does not always find its way onto your invoice.

If the old part left your site, ask what happened to it. Either it was returned for core credit, in which case the credit belongs on the invoice, or it was scrapped, in which case ask why a returnable component was not returned.

Markup on a covered part is not automatically a problem

If a repair is covered for parts, the price of the part should not reach your invoice at all. Where you see a part priced on a covered repair, the question is not whether the markup is fair — it is why the line exists. Those are different disputes and mixing them weakens both.

Freight and expedite charges

Overnight freight on an emergency part is a real cost. Whether it is yours depends on the same test as everything else: is there a clause authorising it? On a full-coverage agreement, the vendor's obligation to restore the equipment usually includes getting the part there.

Where expedited freight is chargeable, it should be at cost and it should be evidenced. A round-number "expedite fee" that recurs at the same amount across invoices is a margin line, not a freight cost.

The checks

  • Which pricing basis does the contract specify — cost, cost-plus, list, or a schedule?
  • On cost-plus, has the cost been evidenced and the stated percentage applied?
  • If a contract price list exists, was it used?
  • Was a core charge levied, and does a matching credit appear?
  • Are freight or expedite charges authorised, at cost, and evidenced?
  • Is the part priced at all on a repair that is covered for parts?

Keep reading

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