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Discussion Starter · #1 ·
Hi all, I am new here. I like this site alot.I've been a carpenter for about 16 years.
Just recently got my Ins. & liscence and started doing my own thing.. I may be out of line here about charging prices. But it isnt really about charging a specific rate.,but when you buy material,rather than the customer buying it. How much do you tack on to the price that was paid.To cover your time and some profit?? I mean they don't know the price but I don't want to rip them off.:confused1: Or is that something you don't do?? I have a big kitchen to do and a whole lot of hardwood.Do I add like an additional 10 to 20percent ?? I want to make sure I am getting what I deserve..Don't want to be known as a low baller,or rip off...

Thanks in advance
 

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ok nj

Now you listen to me and you listen good.You are good at what you do,I gather, and I can tell you respect your customers,wich is good for bussines.Transporting material cost money......thats a man and a truck that cost $300.00 a day.So there is your formula.keep track of your windshield time(that just breaks you even)Then charge them 15% on top of it.Your not riping them off ..do it right,,,not free!
 

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Discussion Starter · #3 ·
Thank You Rossi, You are right I dont want to under charge..Time is money...wear and tear and all that good stuff...:thumbsup:
 

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I guess you're asking for a T&M job? Rossi's number is a good starting point. I also consider carrying costs...more % tacked on for carrying the costs longer and maybe a smaller % for a larger job-make sure you hit your numbers :thumbsup:
 

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More justification to mark up:

Remember you are taking a financial risk here too. (Let's say your check clears and HO's doesn't)

Edit: Not to mention that if the product is defective or damaged, you have to deal with it since you bought it.
 

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I suggest you read this book:

http://www.amazon.com/Markup-Profit-Contractors-Michael-Stone/dp/1572180714

It's an easy read, comes with helpful forms to organize your business and gives you ways of making your business more streamlined overall.

Here's his basic formula:

X = The total amount of business you think you'll sell this year. Let's assume you'll sell $200,000 worth of materials and labor this year.

Y = All projected expenses: ie truck payment, estimated gas usage, insurance, licensing, money spent on new/repairing tools, your salary as owner, etc + profits (what goes back into your business, not your pocket) Let's assume you'll have $85,000 in expenses and you want to make $15,000 profit this year.

If that's the case, your markup = Y/(X+Y) which in this case = 50%. That would mean you take whatever your paying yourself (or employees) for a job and your materials and mark them up 50%.

This is a simple system, but you have to be firm with customers about breaking your costs out because they'll stroke if they see you're marking up materials. They don't realize you have to order them, pick them up, deliver them and take responsibility for them. Also, it's really six one, a half dozen the other. You HAVE to make ends meet and make your profit, so whether you mark up only materials, only labor or both, it still comes out the same depending on your business model.

Also consider this. Markup can range greatly. In New Construction, it's generally much lower than specialty trades, because specialty trades typically can't line up the sheer volume of business and run huge crews. If you're a lone contractor, a markup of 50% is not out of the question, depending on the quality of your product.
 

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I bought that book as a recommendation from someone on here a few weeks ago, it is worth the money. A little long winded but written specifically for the trades. Has great breakdowns of figuring overhead, estimating, all that stuff.
 

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I bought that book as a recommendation from someone on here a few weeks ago, it is worth the money. A little long winded but written specifically for the trades. Has great breakdowns of figuring overhead, estimating, all that stuff.
Me too, Jumbo Jack recommended it and I ordered it. It's stuff I was already doing, but it was nice to see it in print. There are also some interesting nuggets here and there.
 

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That depends on your bidding technique, of course you want to get paid for your time spent gathering materials. There are other ways to charge for that besides adding on a percentage to what you pay. On a remodel you can bid through a generalized approach, you might say "three days of drywall work", put a price on that, and that price would include the time you spend driving to the store, putting the Sheetrock in your truck and brining it over there. Then you would not need to add on a percentage markup for the material. Or if you are doing a time and material bid, the time you spend buying material counts as time on the job, and you bill him for that. No need to do a price markup in that case either.

Everyone has their own bidding technique, so it's up to you. I prefer to not mark up my material, but instead hide the cost within the rest of my bid. If someone sees material being marked up, then yes they might get kind of irritated. But if the cost is hidden within the bid, then what they won't see won't hurt em.
 

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Me too, Jumbo Jack recommended it and I ordered it. It's stuff I was already doing, but it was nice to see it in print. There are also some interesting nuggets here and there.
I just got that book too, after seeing it recommended here a couple of times. I flipped through it but haven't read it yet. Looks like it is not an estimating book, but is geared more towards managing the money in your business.
 

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More justification to mark up:

Remember you are taking a financial risk here too. (Let's say your check clears and HO's doesn't)

Edit: Not to mention that if the product is defective or damaged, you have to deal with it since you bought it.
There is actually less risk if you encourage the homeowner to purchase all the materials. That way you are only risking the check bouncing on the labor portion.
 

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Why do you think it improper to mark up material costs?

Where do you hide the cost of acquiring and guaranteeing the product?

Don't get me wrong, it may not show that I am marking up material; costs, but I do as well as anyone else does that wants to continue in business.

Ever gone to a CAR REPAIR PLACE THAT DOESN'T MARK UP THEIR PARTS?

There is a reason for that.
 

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There is actually less risk if you encourage the homeowner to purchase all the materials. That way you are only risking the check bouncing on the labor portion.
Right :whistlingNumber one the HO doesn't know what to buy. The HO doesn't know one door from another as an example. So you show up to do the work and the HO doesn't have everything, or it's the wrong stuff, or it's damaged.

Why do you think people hire contractors? So the job gets done right. What world are you living in?

Jeeeeeeezzzz :furious:
 

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I have been a contractor for many years and I never try to profit from material. I get an exact quote for material and always make sure I get extra so there is no argument later on. If there is a little bit left over I usually just keep it and if there is alot I return it and deduct the amount from the balance owing. I find the better you get at pricing out your labour the better off you are and you don't even need to think about trying to profit anywhere else. I will d an estimate and then add 10% for good measure and I am always safe.
 

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One thing to remember is this: If you are marking up materials you are technically supposed to have a license to charge sales tax, and you are supposed to be paying it.

I typically charge the customer what I pay for materials, then charge them a "handling" charge for getting the material and delivering it, or I just up-charge on my contract fee to cover running around and picking stuff up.

If I have it(any materials) delivered, I don't tack anything onto the price, it's included in my contract fee.
 

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The minute I leave my house I'm on somebody's dime. They pay for my time picking up all materials needed on the way to their job.

Some jobs I use materials already stocked in truck, they get a %(markup) for time spent stocking them.

You will learn in the School of Hard Knocks. Good luck
 
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