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Probably a dumb question but I have never had a car done like this, yet....so as parts are needed do you have the customer ship the parts to you? Or do you have a deal with a major supplier to get a break on parts and then you bill the customer for them?

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I go both ways

The customer gets what he or she wants....If they want to get involved in the parts buying that's fine with me as long as they get the proper parts. A lot of times I find them buying the wrong stuff or paying way too much for something.
A customer went to Carlisle with me and was all happy that he found the vinyl top trim he needed for his Cuda....The look on his face when I took 3 seconds to tell him it was for a Challenger was priceless---a lesson learned.

I don't buy from large places like Year One, rather I buy from smaller guys like Bill Allphin, Tom at R/T's or Jamie from MegaParts....They all cut me a great deal when I buy large orders.
If I'm fronting the money, making the calls, picking up the parts then I charge 15% over my exact cost...keep in mind that I get 10%-15% off when I make the purchase, and I buy in bulk usually splitting the shipping between two or three customers...