Selling Against Other Contractors

timtim2008

Originally Posted by duckdown
7. I am respectful of their living space. How many contractors will take the time and take off their shoes vs just walking across a beautiful carpet?


i agree, thats why i carry 2 pairs of shoes with me

azsky

I see a lot of bias on this site. Some of you seem to assume that everyone who is hispanic is Mexican, and every Mexican is illegal. My partner is Puerto Rican, born in Wisconsin, and speaks zero Spanish.

Grow up and limit your discussions to work. That's what this forum is supposed to be about.

duckdown

Ever heard of PepBoys? They don't markup the parts when repairing? Ever think that the new world may favor transparency. Will our so-called legitimate practices put our profession out of business in favor of those with a better business model?

kevjob

Do whatever the hell you want with your business, give away labor and materials and do extras for free...

Dont try to tell those of us who charge markup and profit on materials and labor and use change orders on unforseen items that we are somehow ripping people.

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Kevin
Basement Finishing Highlands Ranch Colorado
Littleton Colorado, Basement Remodeling
Kitchen Remodeling Denver

john elliott

I didn't see him telling anyone else what to do. I've read through this thread and he's saying what he does, no more than that.

And he isn't giving anything away for free either, he is doing the right thing, making his money with his hourly charge.

No-one can say he is giving money away until they know how much his hourly charge is. I think his attitude is absolutely spot on. It's the attitude of remodellers who charge a customer $300 for a $30 toilet and boast about it on a public forum that bothers me.

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Ed the Roofer said "John too, in his crass and blunt demeanor.............."

BC Carpenter

Doing the right thing with his hourly charge?

Not saying he's doing anything "wrong" however it is one business model.

Working hourly and not marking up materials (in fact telling HO's to pick up their own) works well for someone not experienced in estimating and business, and who doesn't understand the need for profit, ie overhead.

I mark up my materials, because it is part of a packaged price most times, that price is often quite reasonable for what the end result is. Doesn't mean i'm being unethical or gouging or not being "transparent"

I'm delivering a price for a service, mcdonalds does the same thing. Do you go to mcdonalds and ask for a more "transparent" breakdown on the material list for a bigmac, you know they might mark up the pickles.

No, you go and buy the bigmac because your in a hurry and it's convenient and cheap. you look at the final price, not how they found that price.

Anyone who thinks markup is unethical obviously does not understand running a business, and will stick with their "safe" hourly rate until they are competent to give a fixed price for a job, and understand the profit they need to make to take care of overhead and stay in business.

Last time on my job a customer ordered materials"

Bought Behr paint, after I told him I use Benjamin Moore, and can get a good price for a pail.

Bought toilets that would not fit

Did not buy enough flooring

Short on tile

theres more... We were paid for our time on everything nonetheless...

john elliott

I don't think it's unethical to mark up materials, and to derive some of the money you want to make that way. I jus think it's an inefficient and inaccurate way to run a business.

You see, the only thing that is in limited supply is your time. You can't pick up the phone and order some more, like you can with materials. That's what you should focus on selling, your time, and making damn sure you get enough for it too.


A very simple example- a contractor doing the old way makes some of his money from his time, and some of it from markup from material. A contractor with a more modern approach doesn't mark up the material, because he is charging TWICE as much for his time. The customer doesn't know and doesn't care, because all he is concerned with is the price he pays for the whole job.

The second contractor will make the same amount of money every day he works, but the first won't on days when he doesn't use as much material, or when he is using cheap materials.

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Ed the Roofer said "John too, in his crass and blunt demeanor.............."

BC Carpenter

Depends entirely on your business and its structure.

I make most of my profit from man hours if it's T@M and if it's a fixed price, any profit built into the price I can achieve. The material mark-up is in addition to this, just a bit extra for vehicle maintenance,

As well a lot of things I get at a discounted rate, and provide to people I work for at a marked up rate, which is still a deal for them and what they would pay for same quality. I am able to make profit and build my business, and the client gets good value for their money.

Whatever works for you, when I first started I didn't mark up materials, since then i've raised my rates in addition to charging mark-up on materials I supply. I had to do this to cover my overhead.

I was more referring to another comment in here, "so-called legitimate business practices"

john elliott

The problem I have with this is that it suggests that the person who is marking up his materials is making extra money over the person that does not.

But that isn't necessarily true. In fact it could well be completely untrue, and it could easily be that the person who is not marking up materials might be making way more.

Markup in priced work (NOT T&M) is just an accounting procedure. It's a method that some contractors use to figure how much to bid a job at. It doesn't make the contractor any extra money over another contractor who doesn't bother with it, but who has figured out a way of bidding the job at the highest amount that the customer is happy to pay.

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Ed the Roofer said "John too, in his crass and blunt demeanor.............."

duckdown

In the home theater game, customers tend to want to have a say in the ingredients moreso. For example, many customers specify Monster Cable for in-wall speaker wire. Even though there is better cable on the market that is less expensive, I still let them make this choice...

BC Carpenter

That's exactly what i'm saying, it depends on your business structure, what jobs you do and how you want to run your business. Personally I don't see why you wouldn't use your hard earned discounts to make a bit of money off materials supplied.

You are saying that the guy that doesn't mark up his materials may be making more than the guy who does. This may be true, maybe not, maybe the guy marking up doesn't quote enough for his jobs, maybe the guy who doesn't mark up makes cushy profit from his overall price or from manhours.

However I tend to believe marking up of materials can do nothing but good for a business. But you saying that either one can make as much or more money is my point exactly, proves there is nothing unethical about marking up material, as it has been claimed by others on this thread. It is just one way of doing business.

That is what I am reacting too, the claim that mark up is possibly unethical. I do believe marking up is a profitable way to do business, however we are discussing it is just one method of doing sales and running a business, it is not taking advantage or "gouging" people.


If you are doing a "service" type work for people, coming and doing small jobs for T@M, then I think mark up is absolutely necessary, recover your time and effort, make some profit, as well you save the HO from going out and buying it, the stuff doesn't come from thin air.

buddy110

We are as busy as ever also and guess what? We're the most expensive guys around... Sometimes more expensive is better as long as you can justify why you're more expensive than the guy giving it away. When a customer asks me to break down M&L I simply explain to them that all our products are sold as installed items. The only exceptio to this was during the recently passed tax credit years

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john elliott

I think we've both put our points of view, and I believe there is a lot of common ground. However, as the part I've quoted is a kind of a question I though maybe I had better have a go at answering it.

My answer is that if I was selling the materials to somebody else then I would indeed mark them up. But as I only do priced work, I'm not selling the materials, I'm using them myself in order to do a job which the customer is paying an overall price for. So if I've had some discount then that's great because it means I'm making more money from the job than I would otherwise.

I think where we differ is that you are using markup as a way of working out how much to ask to quote, and I am using other methods to decide what to quote.

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Ed the Roofer said "John too, in his crass and blunt demeanor.............."