It amazes me to no end to ever hear anybody in business stick there nose in the air about somebody marking up materials.

Ignoring any simplistic thoughts about marking up materials is something "you might get away with", something "pirates" do or whatever else has been mentioned.

The facts are if you are a business that isn't marking up your materials you are the exception and not the rule. Before anybody gets their hair standing up, let me just give the pat statement first - whatever you do is fine, what works for you works for you and nobody is trying to tell you have to do anything different -

However, marking up materials is a legitimate business practice. If a customer asks me do we mark up something they are told right to their face - Of course we do. Why, is there some other business you can name that doesn't mark up materials? I haven't had a customer come up with an answer yet.

Why can you mark up materials? - Notice I said "Why can you" not "why should you"

There are costs associated with -
Getting to the materials
Selecting materials (anybody cull wood when pulling it? or select a box that hasn't been opened?)
Hauling materials
Storing materials
Returning materials

Further there are costs associated with warrantying materials and guaranteing materials you install.

Costs associated with floating the money to purchase materials.

These costs are all legitimate and not something somebody is getting away with.

I send all my customers to the tile manufacturer and often I refer to them as a tile warehouse or tile wholesaler. Contractors get discounts on tile and every once in awhile I get a customer who asks if they are going to be getting the tile at a discount because of going through me.

The answer is, yes I get a discount on tile because I purchase a lot of tile and am a steady and guaranteed customer to the tile manufacturer. However if you want me to pass the discount along to you, all you need to do is select your tiles as you normally would and instead of being done with the process, you will now need to

• Place the order for the tile -making sure you are getting exactly what you need. Make sure you double check the sku numbers and verify the quantities.
• Pay for the tile
• Go back a week later to pick up the tile when it comes in
• Make sure you verify the order is correct, check every box for damage and verify colors and die lot numbers are correct, because you are now responsible for the quality of the product, not us.
• Bring tile to job site and have it stacked and accessable in the order it will be installed
• Deal with any issues that come up such as broken tiles in the middle of a box and being short.
• Please make sure you understand the paragraph in the contract you signed about work stoppages caused by customer supplied material defects.

I haven't seen a customer born yet that will go through what we go through for the discount. They understand the mark-up and why it is legitimate.

Like I said, I'm not saying that you have to mark up materials, you certainly don't. But material mark-up is legitimate 99% of the time and not just something - some contractors get away with.

 

Absolutely Mike...

[*]Please make sure you understand the paragraph in the contract you signed about work stoppages caused by customer supplied material defects.

I am trying really hard to not install owner supplied materials. Many people show up with inferior products that can never be installed correctly. I hate call backs due to inferior products - like the 8' steel french doors hung on 5/8 FG stock for the jamb my friend bought from Lowes - they hardly had it off the truck as we watched the jambs spliting at the hinges.

I turn down every job that includes owner or contractor supplied cabinets from HD or Lowes. I can not mark them up enough to cover the PITA factor - I have yet to see a cabinet delivery arrive w/o damage. I buy alot of my products in WA and have them shipped up if I can not get them at my only supplier who is very good, but does not have everything.

My niche up here is getting things that are not available locally, no HO is going to go through the hassles I do and no one ever questions my mark up.

The best part about contractor supplied materials is that I put them all on a CC and pay it off every month - the airline miles have taken me all over the world.

 

Maj - you might not be able to mark up 50%, but I'll bet your customers would tolerate some sort of mark-up, even if it was only 15%. Most people understand the right for a man in business to make money - they just don't want you making all your money off of their one job!

 

The best part about contractor supplied materials is that I put them all on a CC and pay it off every month - the airline miles have taken me all over the world.

:whistling Hush now, before everybody figures that one out! I'm getting a free big screen this year off of my CC miles, and am shooting for two free airline tickets to Europe for next year for our 10th wedding anniversary. :clap:

 

No customer-supplied materials unless it's something extremely odd or peculiar, like installing an antique family heirloom of some sort. I would have to mark up their materials more than mine just for the pita factors described by others.

Occasionally I get requests from customers to supply their own materials. So I ask them what other businesses they deal with on that basis. Do you take your own steak to the restaurant and ask them to cook it for you? Do you bring parts to your car dealer and ask them to install them? Do you take flour to the bakery? Do you bring your own sutures to surgery?

Bottom line, when a customer thinks they can save money by cutting out my markup on materials (which they really don't anyway because they can't buy at my prices), I walk away regardless. That mentality is a telltale of other problems looming down the road.

DG/Builder

 

If I have to tell my client to buy their own materials that would be unbeneficials for me.
I have to mark up my materials. Thats why i have specials account at my supplier. it's my profits.

 

Geez, there it is again. I am responding to this, then I think I will stay off of the forums, I am getting tired of being hammered for an OPINION!

Pirates was referring to our local rip off agents...not to people who mark up material, a legitimate practice. I mark up material if I buy it. I don't use customer supplied material, I order what I want from my supplier, and the customer pays for it.

I was not suggesting only "some" contractors get away with it. I can do it if I choose to, and like our opinions, I can have my own choice, right or wrong, to do what I wish to do, and I choose not to purchase materials.

And lastly, I am not sticking my nose in the air about anything. I really don't believe I am one of the primma donnas on this forum, I have yet to criticize any members, or chastize anyone's opinion. If you think I am preaching from the pulpit for some just noble cause of the downtrodden homeowners ripped off by the unscrupulous contractor, then I am heartliy sorry and apologize for zinging anyone's feelings....geez.

 

If you meant no offense, that's cool. I'm just telling you how it may have come across to other people. Just figured I would clarify.

I never said for one second what you should be doing, if it works for you, that's all that matters right?

Again, it's different markets, that's all.

I'm sure there is a formula to build the extraneous costs into our labor costs,but then people around here would scream about how hight the labor quotes were. This way just works for us.


Mike, I agree with everything you said 100%!!

Geez, there it is again. I am responding to this, then I think I will stay off of the forums, I am getting tired of being hammered for an OPINION!

Pirates was referring to our local rip off agents...not to people who mark up material, a legitimate practice. I mark up material if I buy it. I don't use customer supplied material, I order what I want from my supplier, and the customer pays for it.

I was not suggesting only "some" contractors get away with it. I can do it if I choose to, and like our opinions, I can have my own choice, right or wrong, to do what I wish to do, and I choose not to purchase materials.

And lastly, I am not sticking my nose in the air about anything. I really don't believe I am one of the primma donnas on this forum, I have yet to critisize any members, or chastize anyone's opinion. If you think I am preaching from the pulpit for some just noble cause of the downtrodden homeowners ripped off by the unscrupulous contractor, then I am heartliy sorry and apologize for zinging anyone's feelings....geez.

 

If I were to break the mold and charge what some of you do, and heaven forbid, add 50% markup on materials,......... I would be out of business immediately!!!!!!!! People around here are fully aware of what materials cost and absolutely would not go for a contractor adding anything for markup. They'll find someone else who will do just labor.

I am fully aware of how contracting is SUPPOSED to work, but it just doesn't fly around here!!!!:no:

OK, go ahead and beat the $hit outa me, I'm ready this time..:boxing:

I reread my post, this may be where the misunderstanding is. I, by no means, was implying what you guys do was pirating or ripping off the customer. I said I know how contracting is SUPPOSED to work because, I get all the magazines you guys do and read all the info on the net, etc. So I am fully aware of how to run a business!! Please don't go through how to markup & add profit, I KNOW ALL THAT ALREADY!!!. What I was saying is that the area I live in does not follow the standard operating procedure.... Lord, I wish I could mark up, even 20%, but the people around here are penny pinchers... The way it usually works by having their materials on hand, I adjust my labor rates for the pita factor...

The answer is, yes I get a discount on tile because I purchase a lot of tile and am a steady and guaranteed customer to the tile manufacturer. However if you want me to pass the discount along to you, all you need to do is select your tiles as you normally would and instead of being done with the process, you will now need to

Place the order for the tile -making sure you are getting exactly what you need. Make sure you double check the sku numbers and verify the quantities.
Pay for the tile
Go back a week later to pick up the tile when it comes in
Make sure you verify the order is correct, check every box for damage and verify colors and die lot numbers are correct, because you are now responsible for the quality of the product, not us.
Bring tile to job site and have it stacked and accessable in the order it will be installed
Deal with any issues that come up such as broken tiles in the middle of a box and being short.
Please make sure you understand the paragraph in the contract you signed about work stoppages caused by customer supplied material defects.

I haven't seen a customer born yet that will go through what we go through for the discount. They understand the mark-up and why it is legitimate.

Mike, that's it exactly...... the people here are that way....They would rather get the best material discount and pay the contractor whatever it takes to make it work.... I could fill a page on the experiences I've had doing this

 

Geez, there it is again. I am responding to this, then I think I will stay off of the forums, I am getting tired of being hammered for an OPINION!

Pirates was referring to our local rip off agents...not to people who mark up material, a legitimate practice. I mark up material if I buy it. I don't use customer supplied material, I order what I want from my supplier, and the customer pays for it.

I was not suggesting only "some" contractors get away with it. I can do it if I choose to, and like our opinions, I can have my own choice, right or wrong, to do what I wish to do, and I choose not to purchase materials.

And lastly, I am not sticking my nose in the air about anything. I really don't believe I am one of the primma donnas on this forum, I have yet to criticize any members, or chastize anyone's opinion. If you think I am preaching from the pulpit for some just noble cause of the downtrodden homeowners ripped off by the unscrupulous contractor, then I am heartliy sorry and apologize for zinging anyone's feelings....geez.

Sorry you take it personally. I would suggest you don't post either if you are going to be offended by anybody who has an experience that is different then your own. The forums are about information, there are always two or more sides to everything and if you feel you are being hammered or chastized everytime somebody says something that is contrary to yourself or in reallity is only using your post as a springboard to add to the discussion then you probably should avoid posting, it isn't worth the stress to yourself nor to others to have to continuolsly read post after post of somebody crying they are being abused.

I personally wish you would post only in agreement with everything being said here, because I feel chastized and hammered everytime you post something that is in disagreement with the herd and offers another opinion or viewpoint that might benefit myself or someone else. :w00t:

There is also an ignore list on your user CP. You can simply add my user name to it and you won't ever see another one of my posts. Cut and paste "Mike Finley". (Control -C, then press control-V)

 

Mike, that's it exactly...... the people here are that way....They would rather get the best material discount and pay the contractor whatever it takes to make it work.... I could fill a page on the experiences I've had doing this

Maj, I know what you are feeling, I've been there myself. I moved in 1994, I couldn't stand my services and skills being looked at like a commodity, - people looking at my services the same way they look at gasoline, nothing different between one gas stations gas or another so why not just buy at the cheapest place? The situation not only is tough on a business to operate profitably, but worse it destroyed my sense of self-worth and I kept seeing the "why bother" mentality keep creeping closer and closer into my work ethic.

 

We live in an area with a bunch of overpaid pencil pushers who move out to the "country" to "get away from it all".

They wouldn't know the difference between a 2x4 and a 2x6 even if they were accountants. Seriously, a buncha stupid smart people out here.

:whistling :whistling :whistling :whistling :whistling Your post is rated number one in my day.

 

I said I know how contracting is SUPPOSED to work because, I get all the magazines you guys do and read all the info on the net, etc. So I am fully aware of how to run a business!!

I never read no books. All my battle scars where earned with hammer in hand.

:thumbsup: :thumbsup: :thumbsup: :thumbsup:

 

:whistling :whistling :whistling :whistling :whistling Your post is rated number one in my day.

:thumbsup:

 

I'm sure there is a formula to build the extraneous costs into our labor costs,but then people around here would scream about how hight the labor quotes were. This way just works for us.

Not necessarily advocating this but I thought I'd clarify it a little more.

If you break down your costs to you client, they should see at least these items -

Materials
Labor
Overhead
Profit
Contractor's fee or Mark up

If you included all of you O/P in you labor rate - they'd only see labor $ materials.

I do not break down my prices for my clients unless they really need it done for some reason. They want X,Y,and Z done - I give them a single number.

Sometimes I'm ask to break it down, and a discussion could ensue over my overhead percentage and profit percentage. I have only once been asked to break down my price and it was for other reasons than chiseling down the numbers. Although, alot of people believe that we are not supposed to make a profit or that we have overhead.

When I am asked my labor rate - I say it depends on the job I rarely work T&M. When I am asked how much it costs to hang 30 boards of Sheetrock - I say it depends. When they press - I ask them how much a car costs? They say what type and I then say 'exactly'.

I could not imagine doing it any other way; especially giving them a labor rate and then trying to get my overhead and profit in there. I bid everything and have gotten very good being inclusive and selling the whole job than biding against piece worked bids that do not include the whole scope.

LIke I said I am a remodeler andknow new const. is different.

 

My O and P are not put on quotes. they are my business and not subject to debate.

 

And I agree with mike. All this being PC and handing out hugs to people who can not handle someone disagreeing with them is what is ruining this country.

 

User 1: Hey what about all those Illegals?

User 2: Ya we should help them out.

User 3: I agree

User 1: That’s why I started this thread. I agree also. I wonder what #4 has to say about that.

User 4: You guys really know me, I agree too.

User 2: Man I hate doing work for HO who buys there own Materials.

User 4: Holy crap I was just think the very same thing.

User 1: Yep I don’t do it either.

User 3: I think you guys should come over my house tonight I just got the Friends Box set!

User 1: Sweet I bet we all agree that is the best show ever.

User2: You hit it right on the head #1 best ever.

User 2: Hey #3 thanks for stealing my thread. I was just thinking we should talk about sitcoms. And poof you made it happen.

User 3: No problem. I thought this would make you smile some more.

User 1: I bet we all drive the same truck, have the same style business and wives that look the same!

User 3: I sure hope no one who would disagree with us will join. That would make me really sad cause I know I can come here and have my own perfect world where we are all a like and no one is ever sad. Were kind of like Tella Tubys! Yay.

 

Yeah, we give a fixed price. I refuse to justify our prices to some jackass who thinks they know what we do.

They go to Home Depot and look up a lock set for $75 and piss and moan that they paid us $175 for it.

Like you guys mentioned, I guess the time, gas, risk (car accidents, large heavy box falling on top of us off the shelf) doesn't count. We aren't actually supposed to MAKE any money.

They think we deserve $15/ hour for what we do. Not realizing that there's no one else paying for insurance, health, overhead etc. I guess we should PAY to do work for them right?

I dare some of these people to try and do what you guys do on their own. Go ahead. Then tell me what you think your time is worth if you do it.

Drs don't work for free, neither do accountants. Why should a contractor? People don't see blue collar workers as "educated, specialized, professionals" like they are. Again, I ask them to try doing it. I don't pretend I can do what my surgeon does. I just don't get why seemingly intelligent people can't recognize what morons they look like when they question this stuff.

Not necessarily advocating this but I thought I'd clarify it a little more.

If you break down your costs to you client, they should see at least these items -

Materials
Labor
Overhead
Profit
Contractor's fee or Mark up

If you included all of you O/P in you labor rate - they'd only see labor $ materials.

I do not break down my prices for my clients unless they really need it done for some reason. They want X,Y,and Z done - I give them a single number.

Sometimes I'm ask to break it down, and a discussion could ensue over my overhead percentage and profit percentage. I have only once been asked to break down my price and it was for other reasons than chiseling down the numbers. Although, alot of people believe that we are not supposed to make a profit or that we have overhead.

When I am asked my labor rate - I say it depends on the job I rarely work T&M. When I am asked how much it costs to hang 30 boards of Sheetrock - I say it depends. When they press - I ask them how much a car costs? They say what type and I then say 'exactly'.

I could not imagine doing it any other way; especially giving them a labor rate and then trying to get my overhead and profit in there. I bid everything and have gotten very good being inclusive and selling the whole job than biding against piece worked bids that do not include the whole scope.

LIke I said I am a remodeler andknow new const. is different.

 

Yeah, we give a fixed price. I refuse to justify our prices to some jackass who thinks they know what we do.

They go to Home Depot and look up a lock set for $75 and piss and moan that they paid us $175 for it.

Wow, I hope that was an example not factual markup. That's over 1.25% markup. If I knew I was buying a $75 item and paying the contractor $100 just to go get it on my behalf, I'd piss and moan too! If your area supports that big of a markup, don't move away, you definately won't get that in the south anywhere! The averages are anywhere from 5% to 15% markup on materials for those who do charge them.

I agree, once again, with Maj, some areas simply won't support marking up materials, but there are other ways to recouperate the same financial margins without tacking it on materials. In this small neck of the woods, customers do not mind at all to see any sort of "Fee" but the word Profit makes them breathe fire. We get compensated at the same rate you guys do it's just worded differently to satisfy the customer's.

But back on topic, we will not do any project where the customer supplies materials simply because rarely do they get the right item, or the quality of item we would recommend for the situation. If we have to warranty anything for a year, then we want to know it was the right material and installed properly. So far, I haven't had anyone that was displeased with that policy. We get 30% of the job cost down and the rest is done per schedule of values.

 

Yep, that was hypothetical for examples sake.

At most we charge 67% on labor and materials.

I think it's largely to do with the differences in home prices between CT and the midwest or south.

A 2x4 doesn't cost much more here than where you guys are, but if we were to only mark up 15%, we'd never stay in business.

The Dept of Consumer Protection here suggests 67%, that 50% would only BARELY keep you solvent.

It is really interesting though, to realize the differences in the markets!

Wow, I hope that was an example not factual markup. That's over 1.25% markup. If I knew I was buying a $75 item and paying the contractor $100 just to go get it on my behalf, I'd piss and moan too! If your area supports that big of a markup, don't move away, you definately won't get that in the south anywhere! The averages are anywhere from 5% to 15% markup on materials for those who do charge them.

I agree, once again, with Maj, some areas simply won't support marking up materials, but there are other ways to recouperate the same financial margins without tacking it on materials. In this small neck of the woods, customers do not mind at all to see any sort of "Fee" but the word Profit makes them breathe fire. We get compensated at the same rate you guys do it's just worded differently to satisfy the customer's.

But back on topic, we will not do any project where the customer supplies materials simply because rarely do they get the right item, or the quality of item we would recommend for the situation. If we have to warranty anything for a year, then we want to know it was the right material and installed properly. So far, I haven't had anyone that was displeased with that policy. We get 30% of the job cost down and the rest is done per schedule of values.

 

Sorry you take it personally. I would suggest you don't post either if you are going to be offended by anybody who has an experience that is different then your own. The forums are about information, there are always two or more sides to everything and if you feel you are being hammered or chastized everytime somebody says something that is contrary to yourself or in reallity is only using your post as a springboard to add to the discussion then you probably should avoid posting, it isn't worth the stress to yourself nor to others to have to continuolsly read post after post of somebody crying they are being abused.

I personally wish you would post only in agreement with everything being said here, because I feel chastized and hammered everytime you post something that is in disagreement with the herd and offers another opinion or viewpoint that might benefit myself or someone else. :w00t:

There is also an ignore list on your user CP. You can simply add my user name to it and you won't ever see another one of my posts. Cut and paste "Mike Finley". (Control -C, then press control-V)

Another gee whiz, totally not what I meant, but whatever. It is my understanding these forums are to share information, not work out pissing contests. I think I have been very clear that I try my best to not offend anyone, but...I will always take what I read with a grain of salt. Business practices are what we, contractors, make them. There are models, perfect scenarios, wishful thinking, and real time experience. I respect your experience and knowledge based on your insight from reading your posts. I am not going to move to a better market just so I can follow your practices. I like it where I am, I am making a good living here, I have an excellent reputation in the trade, and I will keep on doing what I do...because it works for me, not neccessarily anyone else, but me.

I do not advocate anyone do what I do in regards to business. I do not contradict others because of how they conduct business. However, just for you guys, I will cease any posting unless I agree 100% with the herd, and since I am never marching to the herd beat, thats it for me. I would rather do that then use an ignore button.

Funny thing about this thread, it started as what deposits are made to a contractor, and turned into this.

 

See dude - this is where you lose it...

I am not going to move to a better market just so I can follow your practices. I like it where I am, I am making a good living here, I have an excellent reputation in the trade, and I will keep on doing what I do...

Who the fu#k suggested you should move? Who the fu#k gives a sh!t one way or the other? The only comments made about moving were from me to MAJ not you, and they weren't comments directed at suggesting he move either. Man, do me a favor and reread everything 3 times before you respond. I only say this because you post some great stuff and you make some great comments and insights, but then you throw in some off the wall comment such as this one or the one before about you "getting hammered" and you're off in left field - then when it's addressed and I mean specifically, even quoted verbatim you then go off on another loo - WTF????

Your take stuff way to personally. I say this in the most sincere way possible - but this forum and everyones opinions aren't spinning around you and your world.

I'm only making this last effort toward you because I have no animosity toward you and respect you - at least as much as I can respect some anonymous entity on the internet that calls himself "Joasis". Stick around or sulk, I would rather you stick around and I'm sure others would too, but I'm all done with the walking on eggshells crap around you. The problem seems to be you have a hard time interpreting and comprehending what is written and end up taking it all personally. That's a problem you are going to have to deal with.

I'm going to continue to spout off about sh!t I know nothing about for as long as I can!:shifty:

 

I'm going to continue to spout off about sh!t I know nothing about for as long as I can!

:clap:

Joasis, I agree with Mike that you have a lot to contribute, I thought the premise of the board was to "agree to disagree" about things we well, disagree about.

Nobody harbors any ill will towards anything and I personally will gladly chew someone's ass out in one post and act like nothing happened in another.

Just because I disagree with one thing doesn't mean I discredit the value of that person. I don't hold grudges. :no: Too many people piss me off in the world to do that. I'd have no one to talk to!!

Oh, and please don't do the "goodbye cruel world" post. Nobody gives a crap and won't go chasing, begging you to stay. So if you say it, you'd better mean it.

You don't need to go anywhere, just develop a thicker skin. WTF do you care what any of us thinks? If you don't sleep with us or share your DNA who are we to you? Nuttin'.

Pish posh. Water off a duck's back man!! :w00t:

 

I'd say something but I'm still working on toughing up my skin, and my self appointed moderator status expired last week. Besides, I'm scared of BoneSaw, he bites hard.

Jo... I WILL say this much... If you go, we will send out a posse and drag you back.


Edit-- Bone, you better know that was joking.. if not, I'm crawling under a rock now. haha