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#158528 07/02/06 02:41 AM
Joined: Apr 2005
Posts: 27
R
Member
I don't understand why there is always this question about material markup. If you supply the materials then you mark them up to cover :

Travel time and time at store to buy them

Storage of the materials

Interest on credit cards/supply houses etc.. depending on long these items sit in your shop before they are used on job

Warranty on these items which you are now responsible for.

If the customer questions your mark up tell them to buy it themselves and it is not covered by warranty. These types of customers remind of the people that drive across town to save $2 on gas but don't realize it costs them $3 to drive there.

Mark up materials no matter what type of work it is. If they do decide to get them on they're own then let them do just that... don't sit there and supply them a shopping list because the time you spend doing that is part of markup also.

Edited to remove Flaming comments.



[This message has been edited by dougwells (edited 07-02-2006).]

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#158529 07/02/06 08:51 AM
Joined: Dec 2004
Posts: 1,064
D
Member
What?

Your kidding me right?


Rich, pls rethink that comment. Your way out of line here..

[This message has been edited by Dnkldorf (edited 07-02-2006).]

#158530 07/02/06 10:48 AM
Joined: Jan 2005
Posts: 5,445
Likes: 2
Cat Servant
Member
I know, "mark-up" can be a passionate topic. Perhaps I should clarify a few of my thoughts here.

I recognise that we all have bills to be paid, and we simply must pay them if we are to remain in business. I also recognise that our every activity has unseen costs associated with it.

Yet, no one ever won an argument with a customer. Even when you "win," you lose- the guy never need call you again, or reccomend you to others. You really don't want to leave an unhappy customer behind.

This is especially important in our trade as so much of what we do is "invisible." Heck, the very thing we control- electricity- is invisible.

The only price that matters to the customer is the bottom line- the total due. If, for taxes or some other reason you must break out a "materials" price, this price has to be something that looks reasonable to the customer. Appearances count!

Back at the office, you may have an entirely different figure for those materials- one reflecting your 'overhead' costs. Such a figure is of value, as it helps you manage your business- but that's not really of interest to the customer.

In the job I recently did, the customer, in effect, paid twice for the installation- once to me, and once as part of the other guy's material charge. Yet, the customer was willing to do this, as the pricing practices of the other guy had undermined the customer's confidence in him.

In business, things like "trust" and "confidence" cannot be ignored.

#158531 07/02/06 11:28 AM
Joined: Apr 2006
Posts: 83
E
Member
As a follow up to Reno's comments,

I found that when I began billing lump sum only, these issues dropped dramatically. I prefer to quote projects up front with a fixed price and then if the customer asks about the price of this item or that item, I am free to share my cost with him or her. I don't get into all the costs, it doesn't matter.

I know that my business needs to earn $X.XX per hour worked over cost and the same goes for materials. I even go so far as to remove the price that I pay for an item if the customer says that he or she can get it cheaper elsewhere. But, my overhead stays in.

Why would I do this? Quite simply because I warranty my installation. If something goes wrong and it is my fault, I will replace it - at my cost. Now, this doesn't mean that if the product is faulty, that I warranty the product, that is different - in that case, if the customer supplied it, they can pay for my time to replace it, and again I will charge for my time with the approprate $$$ for Overhead and Profit.

I have done this in both up front fixed bid contracts and in Time and Materials projects, but the key for it to work is a strong up front contract explaining the process, what you are providing and what is expected of the customer. With a good solid description of the work to be performed or in the case of time and materials the work that was performed and the cost to the customer as one lump sum, I rarely run into these types of issues.

No one goes into Mc D's and asks for the cost of the pickles, onions, 2 all beef patties... you get the idea. All they want to know is the price. It is no different for us. But, try to put yourself in a position that the client sees you working with and for them, not someone they need to fight with to ensure that they don't get worked over financially.

Just my opinion.

Glen


[This message has been edited by ExpressQuote (edited 07-02-2006).]

#158532 07/02/06 11:49 AM
Joined: Nov 2005
Posts: 507
M
Member
dnk, you are pretty adimant and surprised at rich's comment. I truly don't know your pricing policies (different markets, different customers) but I do know what you have been posting. Your base post line is that most of us charge too much. we should keep our overhead down anyway possible and charge less.

can you really argue with Rich R's perspective? You have created the image that the contractors on these boards have of you. Now you want to get indignant when someone uses your self-created image as an example?

#158533 07/02/06 12:12 PM
Joined: Jan 2003
Posts: 4,391
I
Moderator
Regardless of our opinions of each other there is no reason to add them to our posts.

We can disagree with each other without insulting each other.

Personal insults have no place here.

Bob


Bob Badger
Construction & Maintenance Electrician
Massachusetts
#158534 07/02/06 12:19 PM
Joined: Dec 2000
Posts: 4,294
Member
Personal attacks are not what this forum is here for. There are plenty of places where that kind of crap is acceptable. This isn't one of them.

#158535 07/02/06 12:21 PM
Joined: Dec 2004
Posts: 1,064
D
Member
Erik, you should know my pricing policies, they are posted on this forum.

Sometimes you can mark-up materials by 100%, and sometimes you can only get 10%. I shoot for annual mark-up on materials of 30-35%. there is nothing wrong with this at all.

We as contractors sell materials, it is what we do.

The problem I have, is someone trying to convince everyone, that EVERYONE should do it HIS way. This bugs me, as you know. You constantly preach this, and them blame everyone else for you not being able to make money. Why?


I have no idea who Rich R is. Or what he does. Or what market he is in.

#158536 07/02/06 12:26 PM
Joined: Nov 2005
Posts: 507
M
Member
i wire and electure, fair enough.

dnk, I don't blame anyone for me not being able to make money personnally. when i talk about the issue it's as an industry as a whole. Individually, we do what we need to in order to make money. It is a little more difficult when a licensed contractor thinks that $1250 is a fair price for a 200A service. But we deal with that as well.

Truthfully I don't preach anything. I do keep saying the same things, but you must admit that lately I've even backed off of that. When you first find a site like this or EK, you tend to want to spread your knowledge (in this case, information that has successfully been implemented by 1000's of contractors across the country) to help everyone do better. Then after a short period of time, you realize that you can put all the information in the world out there, but it doesn't mean everyone will understand it or follow it.

And as I've already said, I haven't posted hardly any of my own ideas. I've sipmly put forth systems, processes and procedures that are being used by thousands of contractors across the country with tremendous success.

My simple point here was that Rich R used you as an example based on the image that you have created for yourself. If that is not the correct image, than rethink what you have done to create it.

But I must ask this question, what is better - trying to pass information along to fellow contractors to build better business, better lives and better futures OR badmouthing contractors in a market that you don't even work in and undermining their ability to create a better business?

Think about it. And now, think about the image you have created of yourself.



[This message has been edited by mahlere (edited 07-02-2006).]

#158537 07/02/06 01:34 PM
Joined: May 2003
Posts: 1,158
Member
Sorry Guy I am locking this thread until i have my morning coffee. Unfortunately i have had a bout of bronchitis for 8 days now and am on very potent antibiotics. I may reopen it but don't count on it

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