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Markup On Customer Purchased Materials

 
 
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Old 11-09-2012, 04:30 PM  
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Markup On Customer Purchased Materials


I am good at explaining to my clients why I markup on materials and how much time is involved in answering questions, visiting suppliers, verifying fitment, communicating with subs etc. But this has always been a sticky area for me and I'm sure other contractors. I've never had it come to a major problem but I wanted to see how others deal with it.
I'm very clear to my clients about my markup on materials and subs. So that's no problem. The way I work it is whatever the HO finds that they like, I will do the ordering. That is true whether it's being bought from a store where I hold an account or anywhere else. The whole time I'm very involved in helping choose the right materials and/or fixtures and answering questions via email, text of phone.
The problem is when the HO buys their own things for the job. Most of the time I just let it slide as it's only one or two small items (tile, lights or a fixture). But what do you do when the HO wants to buy everything themselves? Do you ask them for all their receipts so you can figure the proper markup? That would seem awkward. Do you make them buy through you? What about the big ticket items such as appliances, cabinets or windows?
Again I have not had any major issues with this but I am trying to get a good plan in place in the event this comes up on a future job.
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Old 11-09-2012, 07:36 PM  
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Re: Markup On Customer Purchased Materials


Just add extra to the labour cost. It seems pretty silly trying to markup materials you didn't buy.

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Old 11-09-2012, 08:09 PM  
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Re: Markup On Customer Purchased Materials


My contract states that Markup covers the expenses, warranties, skill, experience, time, and smooth and speedy flow of the project.

I give customers 2 options when they wish to provide their own materials.

Option 1: Your responsible for warranty including installation above or below any material that is defective and any loss of production of work due to materials shortages, defects, etc that will incur my crew going home and their rate being paid for the remainder of the day.

Option 2: You spec out the type, color, product, brand, make (you get the point) of material you want in you project. I take care of picking it up, making sure its in serviceable condition, coordinating a smooth speedy schedule, and by the way I'll warranty it for 5 years if anything goes wrong.

Its my belief people hire us not because they are rich slobs with hundreds falling out of their pockets but because we can run a job like a fine ballet coordinating all the facets that the DIY Channels make look like don't exist. If a homeowner wanted the hassle of a project dealing with suppliers, subs, and vendors when things go wrong then they would do it themselves. They pay us our markup so all they have to do is sign their name and sit back watching whatever reality TV show trips their trigger.

There is a cost that goes with Warranty and Coordination in a project, you can have peace of mind by paying for it or deal with it yourself. I don't markup materials provided by homeowners, but anything goes wrong with say a tub and tile needs to be replaced its not on my dime. Warranties sell Markup
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Old 11-09-2012, 08:43 PM  
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Re: Markup On Customer Purchased Materials


Explain to them that when they order, you spend more time running around getting the things they missed, fixing the wrong materials, correcting mistakes, blah blah blah, fill in the blank.

The job just goes smoother when one person (the contractor) is held accountable for all those things working in sync.

On my current reno, owner ordered all her own cabinets, and appliances. Guess who gets to modify the cabinets.... I will not take on the headaches, since she ordered it, she can reorder and replace....... and replace....... and replace. Its been fun.
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Old 11-11-2012, 12:15 PM  
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Re: Markup On Customer Purchased Materials


Quote:
Originally Posted by ryanshull View Post
Explain to them that when they order, you spend more time running around getting the things they missed, fixing the wrong materials, correcting mistakes, blah blah blah, fill in the blank.

The job just goes smoother when one person (the contractor) is held accountable for all those things working in sync.

On my current reno, owner ordered all her own cabinets, and appliances. Guess who gets to modify the cabinets.... I will not take on the headaches, since she ordered it, she can reorder and replace....... and replace....... and replace. Its been fun.

I agree with this and what others have said. I personally tailor my contract to what the client wants/needs. As far as HO getting all the materials. That's fine, I warranty my labor (it's the law) and nothing else. If it's the wrong material or is short, in my contract I have a clause that specifically states that if I have to run for material it's $125/hr per man hour + $.80/mile.
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Old 11-13-2012, 05:51 PM  
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Re: Markup On Customer Purchased Materials


We give them allowances in the scope of work that states "All allowances are calculated at total MSRP plus tax and delivery. All materials purchased by Contractor at Contractor's vendor." Unless previously negotiated, we do not install or warranty HO purchased items.
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Old 11-15-2012, 12:44 AM  
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Re: Markup On Customer Purchased Materials


Quote:
Originally Posted by AJAX

I agree with this and what others have said. I personally tailor my contract to what the client wants/needs. As far as HO getting all the materials. That's fine, I warranty my labor (it's the law) and nothing else. If it's the wrong material or is short, in my contract I have a clause that specifically states that if I have to run for material it's $125/hr per man hour + $.80/mile.
I have a similar clause but I have had clients try to say that they will go get the missing parts while my crew wait ... And then argue about me charging for downtime while we wait even though this is mentioned in the terms and conditions. Any suggestions on how to explain this without being argumentative as can be a touchy one with some clients?
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Old 11-15-2012, 07:46 AM  
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Re: Markup On Customer Purchased Materials


Quote:
Originally Posted by BoulderBuilder View Post
I am good at explaining to my clients why I markup on materials and how much time is involved in answering questions, visiting suppliers, verifying fitment, communicating with subs etc. But this has always been a sticky area for me and I'm sure other contractors. I've never had it come to a major problem but I wanted to see how others deal with it.
I'm very clear to my clients about my markup on materials and subs. So that's no problem. The way I work it is whatever the HO finds that they like, I will do the ordering. That is true whether it's being bought from a store where I hold an account or anywhere else. The whole time I'm very involved in helping choose the right materials and/or fixtures and answering questions via email, text of phone.
The problem is when the HO buys their own things for the job. Most of the time I just let it slide as it's only one or two small items (tile, lights or a fixture). But what do you do when the HO wants to buy everything themselves? Do you ask them for all their receipts so you can figure the proper markup? That would seem awkward. Do you make them buy through you? What about the big ticket items such as appliances, cabinets or windows?
Again I have not had any major issues with this but I am trying to get a good plan in place in the event this comes up on a future job.
Maybe you should just structure this cost into the labor pricing so you dont have to deal with explaining this to your client, who may or may not understand.

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