Time + Material + What % Of Markup Is Reasonable

tomcutt

Hi Guys

I have recently started using a new plumber on some of my projects ,
the issue is his material markup .

He started in the 20 to 30% range which I would consider, fairly standard correct?

Now his latest invoice he has gone wild

.64 cent abs 90 with markup $2.50
.89 ty 3.50
2.86 three inch 90 $12.00 etc etc

Any thoughts or do you think maybe he is starving ?

Cheers Tom

mdshunk

I think that if you believe it's excessive, pay the bill and don't use him again. I resent having anyone question my bill. Either use him or don't, but resist the urge to sword fight over nickels and dimes like you seem to want to do. I don't happen to believe his markup was excessive, considering the nominal cost of these items. I happen to use a sliding scale, and that cheap stuff has a pretty dramatic markup. The expensive stuff, no so much.

mdshunk

If I was selling those fittings, with my markup chart, my prices would be as follows

.64 cent 90 would be 3.68
.89 cent tee would be 5.12
2.86 three in 90 would be 13.58

POOLMANinCT

i think you are being penny wise and dollar foolish...
pay the bill

was he on time, did he have to go back to job for corections???
did 15 bucks in material blow your margin? <then a couple fittings is least of your probs.

if he delivered punctual & quality work,, use him again... bridge burning is foolish

tomcutt

Actually, I was not trying to start a sword fight over nickles and dimes , the fitting prices were just a sample . I was questioning the inconsistencies in pricing .

The difference in his markup created over a
$300.00 shortcoming in my plumbing budget.

mdshunk

It's not your plumber's fault you budget wrong. You pick an arbitrary plumbing budget based on whatever, then hire him T&M. Hmmmmm. He's aparently gravitating to a different pricing schedule, and you're along for the ride. Happens sometimes.

Grumpy

Depends what you are marking up. Labor or material? 20 is low for sure. 50% may be a little high especially if he is charging you to go get the materials. If I am bidding the job I am marking up materials 40%, so my T&M markup should be relitevely the same.

I've seen some of my large commercial competitors charging 100% on low cost items when billing Time & Material. I try to mimick these guys as much as possible. To be honest every invoice I send out for T&M, my material markup is different. My hourly rate is the same.

The way I look at it, you can never lose on T&M. Or maybe I should say should never lose.

A saavy buyer would have an agreed to ammount of markup for materials written into the job. I know I would if I were the customer. But on the flip side we exercise the don't ask don't tell policy.

Grumpy

After reading the replies it seems to me most who charge T&M use a sliding scale for markup.

mdshunk

Sliding scale pricing table, per item:
$0.00 to $0.49 x 6
$0.50 to $0.99 x 5.75
$1.00 to $1.49 x 5.5
$1.50 to $1.99 x 5.25
$2.00 to $2.49 x 5
$2.50 to $2.99 x 4.75
$3.00 to $3.99 x 4.5
$4.00 to $4.99 x 4.375
$5.00 to $5.99 x 4.25
$6.00 to $6.99 x 4.125
$7.00 to $7.99 x 4
$8.00 to $8.99 x 3.75
$9.00 to $9.99 x 3.625
$10.00 to $19.99 x 3.5
$20.00 to $29.99 x 3.375
$30.00 to $39.99 x 3.25
$40.00 to $49.99 x 3.125
$50.00 to $59.99 x 3
$60.00 to $69.99 x 2.75
$70.00 to $79.99 x 2.625
$80.00 to $89.99 x 2.5
$90.00 to $99.99 x 2.333
$100.00 to $139.99 x 2.25
$140.00 to $169.99 x 2.166
$170.00 to $199.99 x 2
$200.00 to $239.99 x 1.855
$240.00 to $269.99 x 1.823
$270.00 to $299.99 x 1.789
$300.00 to $349.99 x 1.75
$350.00 to $399.99 x 1.725
$400.00 to $499.99 x 1.6875
$500.00 to $749.99 x 1.6
$750.00 to $999.99 x 1.55
$1,000.00 to $1,499.99 x 1.5
$1,500.00 to $1,999.99 x 1.45
$2,000.00 to $2,999.99 x 1.4
$3,000.00 to $4,999.99 x 1.35
$5,000.00 to $9,999.99 x 1.3375
$10,000.00 to $24,999.99 x 1.3333
$25,000.00 to $49,999.99 x 1.33
$50,000.00 to $99,999.99 x 1.3

tomcutt

Interesting ,thanks for all the input .

Grumpy

MD thanks for that. I am going to save that for later use as we do More T&M type work.

You'd be happy to know that your markup is only slightly less than my own int he $5k price range. Or maybe you won't be happy... you can care less

mdshunk

I'm happy it was helpful to you. That's my main goal.

bill02

speaking of mark-up, how many of you work with insurance companies?
Have you ever given a line item bid where they challanged your markup?
I bid a water damage job and added a 30% markup-15% overhead and 15% profit. The insurance company said the industry norm is only 20% and is not willing to pay the "extra"
Any feedback? Thanks

Grumpy

"These are my rates, take it or leave it. If I work for less I lose money and I am not starvng for work."

"Ok that's fine, let's decrease my markup but add on some hours."

mdshunk

Then my answer would be that I'm not willing to work for you.

I do insurance work, as fill-ins. More often, they provide a detailed itemized list that says what they pay, rather than asking for an estimate, in my experience.

bill02

grumpy; mdshunk, thanks for your reply. I figure I could fight a worthless battle for the extra 10% or, since I submitted an "estimate only" based on visual observation, I could suppliment the heck out of the job with "discovered damage" (which does happen). I guess my real question is-Do you think 30% is out of line? I think its cheap! This job is straightaway uncomplicated work for close to 100,000 and I certainly do not want to turn it down.

mdshunk

Post a link to all your accounting records for the last couple of years, and you can get a yes or no answer.

If this is gravy work, I might be inclined to jack the numbers around to what they want to see. Your bottom line might be the same anyhow, but they've got the advantage of having seen your first draft, so you can't fool around too much. You know there will be suppliments. There always is with insurance work. Naturally, make sure your original bid contract is detailed enough that your suppliments are for work genuinely not included in the original bid.

faber307

MD, using that slide chart, do you lump your material into one line item?

That chart would reveal some stout prices if you listed material by item.

Don't get me wrong, I'd love to charge $70.00 for a $20.00 ballast! or $225.00 for a roll of romex!

mdshunk

Nope. Each item type. Read: http://www.contractortalk.com/showth...=sliding+scale



No, the ballasts I put in on Friday afternoon are 18 somthing at the supply house, so they only bill out for around 65.

faber307

No, I mean when you submit and invoice.

Ie: 18 F32T8 electronic ballast............$65ea............$1,170.00
108 wire connectors......................$.42ea............ ...$45.36