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Who gives material costs on their bids?

I see more and more homeowners wanting to know material costs before the job starts.
 

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They are comparison shoppers, they look at the flyers from the box stores. I avoid them as much as possible. If that is the quality that they want, let them have it.

I run into this all of the time. I spend many hours explaining the difference between solid wood and particle board, day after day after day...............
 

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Never ever break out material from labor. Restaurants do not breakout food and the labor to cook the food. Dentists do not break out labor. You can't win, there is no upside. Only the most reprehensible clowns will ask you to do this.
 

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If you had to brake down material on every sale, you'd be doing your books twice for every sold job.

Not only that, but the customers not going to see those pretty little surprise costs we all love so much, hurting job costs.

And last but not least, if you order, pick up, handle and calculate the material you deserve some kinda markup to counter the cost. Customers also have a hard time understanding the magnitude of this task.

To size it up, I don't brake down materials, and try my best to avoid the 'nickel dimers' that want me to.:Thumbs:

Bob
 

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alot of times i'll give an estimate for materials. around here , a contractor can't mark up on materials,not really. more of a headache than it's worth. the lumberyards around here are a$$es. first of all, you have to buy a minimum of 10 grand a month to even GET any kind of discount. second, if you're buying large amounts of materials,they find out who you're working for.(SMALL area.)then they will CALL the person and offer them materials CHEAPER than your mark-up.(but higher than retail,of course.) then people get pissy about material prices! i've been undercut by the lumberyards so many times,that anymore i usually just tell people what i need and let them get it.
 

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carpenter1st said:
alot of times i'll give an estimate for materials. around here , a contractor can't mark up on materials,not really. more of a headache than it's worth. the lumberyards around here are a$$es. first of all, you have to buy a minimum of 10 grand a month to even GET any kind of discount. second, if you're buying large amounts of materials,they find out who you're working for.(SMALL area.)then they will CALL the person and offer them materials CHEAPER than your mark-up.(but higher than retail,of course.) then people get pissy about material prices! i've been undercut by the lumberyards so many times,that anymore i usually just tell people what i need and let them get it.
That is or should be highly unethical. :evil: I'm glad I don't live in your part of the world.
 

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carpenter1st said:
alot of times i'll give an estimate for materials. around here , a contractor can't mark up on materials,not really. more of a headache than it's worth. the lumberyards around here are a$$es. first of all, you have to buy a minimum of 10 grand a month to even GET any kind of discount. second, if you're buying large amounts of materials,they find out who you're working for.(SMALL area.)then they will CALL the person and offer them materials CHEAPER than your mark-up.(but higher than retail,of course.) then people get pissy about material prices! i've been undercut by the lumberyards so many times,that anymore i usually just tell people what i need and let them get it.
That is highly unethical
It should be illegal
You definately don't want to give a breakdown then
Jeez that's horrible

It' bad enough when they see your materials prices, grab a sunday flyer, and complain about why your <insert material here> is such a rip-off compared to this stuff on sale & HD

Which is why I do not separate materials and labor anymore

Sometimes for commercial I will, as the state makes me collect sales tax on the labor for commercial, but I already paid it on the materials, as I am the product's "user"
That's different
They also are more likely to look at the big picture, rather that pick apart little stuff
 

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I would be in that lumber yards parking lot with a hammer and dishing out some revenge to those ********************ers cars. That's total bull ********************.

I never break out material costs, always try to mark up 40% all materials. Even allowances are marked up.
 

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"Even allowances are marked up."

What do you do when you list a "$1,000 allowance for new refrigerator"? Do you include $1400 in your estimate? What happens when the customer selects a $2,000 refrigerator- do they pay you an additional $1,000, or an additional $1,400? What about when they select a $600 refrigerator?

I'm curious because allowances are usually a point of confusion for many contractors, especially when the allowance amount was way off compared to the actual.

Bob
 

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carpenter1st said:
alot of times i'll give an estimate for materials. around here , a contractor can't mark up on materials,not really. more of a headache than it's worth. the lumberyards around here are a$$es. first of all, you have to buy a minimum of 10 grand a month to even GET any kind of discount. second, if you're buying large amounts of materials,they find out who you're working for.(SMALL area.)then they will CALL the person and offer them materials CHEAPER than your mark-up.(but higher than retail,of course.) then people get pissy about material prices! i've been undercut by the lumberyards so many times,that anymore i usually just tell people what i need and let them get it.
Carp, I think the material markup thing is all in your head. This country was and still is being built on a buy and sell market. If you can't make money on handleing you end up not being in biz or working your ars off for little or nothing.

Bob
 

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Bob Kovacs said:
"Even allowances are marked up."

What do you do when you list a "$1,000 allowance for new refrigerator"? Do you include $1400 in your estimate? What happens when the customer selects a $2,000 refrigerator- do they pay you an additional $1,000, or an additional $1,400? What about when they select a $600 refrigerator?

I'm curious because allowances are usually a point of confusion for many contractors, especially when the allowance amount was way off compared to the actual.

Bob
I've never included a refrigertor in a job. Usually attached fixtures such as vanities, sinks, faucets ect...

It usually comes down to 3 methods.

Method 1
Say for a faucet that is included in the total price of the job, I include a picture of the exact model and sku number with the quote. That way the customer can't later say I don't like that one and end up wanting me to install a $400 faucet with it coming out of the profits of the job. They know what they are getting ahead of time.

In the first method the faucet cost is figured then multiplied by 1.4. So a $100 faucet ends up being figured at $140.00 and is added into the expenses of the job to figure the final fixed price.


Method 2
Let's say we don't know exactly the faucet that will end up being used. I will come up with an allowance based on a specific faucet, once again a picture of the faucet and the sku number is show to the customer. Let's use the $100 faucet again as the one that will be used in the allowance. I add the $40 to the expense tally to figure the fixed price. The customer later can either go with the one we used to figure the quote or go with a higher or lower one. They know that we have allowed $100 for this faucet, if they go with a cheaper one say it's a $60 faucet, then they would be getting $40 off the final price. If they go with a $200 faucet they will be adding $100 to the cost of the job. Yes in that case I lose the extra $40 of mark up, in the first case I gained the extra mark up. But the key is you should be pretty damn close on what the customer wants anyways. There usually isn't too much of a suprise.

Method 3
The customer is going to supply the faucet. Sometimes it is easier to let the customer just supply it. In this case I tell them the specs of what they need to buy. (4 inch wide faucet or 8 inch). Once again at time of figuring the quote you figure in the faucet, $100 faucet would be appropriate for this bathroom and budget. Multiply $100 x .4 = $40 to add to the expense to figure the total. You still get the mark up and the customer supplies the faucet.
 

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Glasshousebltr said:
Your forgot method 4 Mike, thats to write a book about it.......jeez.:cheesygri

Bob
I gotta write em that long so I can ensure Grumpy won't pick up any of these secrets. He won't read anything longer than 50 words so I can always get these by him! :cheesygri
 

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AAPaint said:
Wow....That .4 markup is 40% eh? That's dang nice....I only charge 15% on materials usually. I think I gotta beef up the numbers in that area a little! I'm afraid if I did it'll make me un-reasonable on paint prices. I dunno if I'd get away with $65/gallon, hehe! :cheesygri
I'm sure that the mark-up is going to be different in different industries but I try to shoot for 40%. Sometimes its even more and sometimes it is even less. When I send a customer to pick out their ceramic tile to my tile wholesaler the mark up is only 25% because that is my current discount I get there and they show the customers retail pricing, so it does vary.

It certainly would be hard for me to justify outlaying money for customers products and assuming all the risk and responsibility, not to mention the time involved in picking them up, unpacking them, storing them and such for only 15% markup.
 

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Mike Finley said:
I'm sure that the mark-up is going to be different in different industries but I try to shoot for 40%. Sometimes its even more and sometimes it is even less. When I send a customer to pick out their ceramic tile to my tile wholesaler the mark up is only 25% because that is my current discount I get there and they show the customers retail pricing, so it does vary.

It certainly would be hard for me to justify outlaying money for customers products and assuming all the risk and responsibility, not to mention the time involved in picking them up, unpacking them, storing them and such for only 15% markup.
Materials for me is paint, stain, and drywall pretty much.

You know, I guess I just always looked at it differently. I charge 1-2 hours for pickup and delivery time involved....plus take 15% markup. I guess it works out the same?
 

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AAPaint said:
Materials for me is paint, stain, and drywall pretty much.

You know, I guess I just always looked at it differently. I charge 1-2 hours for pickup and delivery time involved....plus take 15% markup. I guess it works out the same?
It sounds like it does. I charge 50% on all materials and don't bother figureing out how many gallons of gas and time etc. it took me to handle it. And, like I said in the other thread I don't put the materials on the bid.
 

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well, the whole biz from the lumberyards to the inspectors is what you might call an ol' boy network. besides, i can't really prove anything. i'm not the only one who has this problem, and NONE of us can get anything on them. anyway who would i report problems to? the BBB???(talk about the blind leading the blind.)
 

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Discussion Starter · #20 ·
Mike Finley said:
I gotta write em that long so I can ensure Grumpy won't pick up any of these secrets. He won't read anything longer than 50 words so I can always get these by him! :cheesygri
:cheesygri :cheesygri :cheesygri :cheesygri :cheesygri
 
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