View Full Version : A couple questions for the pros
08-12-2008, 11:28 PM
hey guys, not a regular poster on this site, but i have had some questions running through my head that i would like to get out and answered.
1) what percent do you guys mark up for all your materials? I know if varies from region to region, but what is average for your area?
2) This is more of an opinionated question...I had a buddy call me up today who is a local contractor and has a job for me that his client wants done. The problem is, the job might be too big for me to tackle (equipment and time wise) do you think i should turn it down and refer them to another LC or do i take the job and just rent the equipment and make time for it. it would be beneficial financially for me to do it but i dont want to upset anybody my taking longer than expected...
let me know your thoughts, thanks guys
08-12-2008, 11:50 PM
Don't be scared, tackle it. Just make sure you do it right. As far as price, every job is differrent. Never give a customer a sq ft price unless you know how much they want and have already figured it. You cane build a 3 ft wall in about the same time as a 2 ft wall, r a 100 - 200 sq ft patio. Know your cost, figure your time, add profit. (sounds simple anyway)
08-14-2008, 04:58 PM
1. we mark up materials 9% to cover overhead. But that number would be different for other contractors using my method.
2. be realistic on how long it would take and see if that is something they would be interested in having done.
08-14-2008, 08:58 PM
10% to 50% depending on material and warranties (if applicable). As for the time, present them an offer and make sure you tell them its going to take x-weeks or months etc. What is the worst they can say...No thanks.
We are a very small company and only do install work 3-4 days a week. We run maintenance two days a week. I explain this upfront to my customers and explain we might be there for 2-3 days in a row but won't be back for another week. Most are fine with it since they have an estimated completion date and I let them know up front.
Grab the bull by the horns and go for it.
08-15-2008, 04:09 PM
I believe it's always best to sell products to your client at or about the same price they would pay to get it themselves. Basically, retail price. Maybe 10-15% more, sometimes.
Reason being; you don't want your client to go check prices themselves and find out you're marking it up way more then they could buy it themselves. Most customers won't do this. But the 20% who will, will get pretty pissed off to find you charging them $4.00 per sq. ft. for pavers they could buy themselves for $2.85 per sq. ft.
So the markup varies depending on the "wholesale discount" given by the company selling you the product. On things like rock, pavers, retaining wall blocks, etc. we are typically able to get that stuff for 10-20% off retail price. So I'd mark up those products up to the retail price the customer would pay. But with items like plants, trees, irrigation parts, I am able to get that stuff for more like 50% off retail list price. So I can mark that stuff up a lot more.
It's important to understand what true markup is too. Most contractors don't understand markup that well. So for example, if you get a $100 item at a 20% wholesale discount, you'd pay $80 for it. Common knowledge, right? But a lot of people would just assume that if you're selling that product for $100, you're getting a 20% markup. WRONG. $80 x 120% is actually only $96.00. What you're actually enjoying is a 25% markup ($80 x 125% = $100).
So when I get plants and irrigation supplies for 50% off, I am actually able to enjoy a 100% MARKUP! ($50 x 200% = $100). Follow the math?
So understanding that, we are able to get only 10-15% markup on some items and up to 100% markup on others. But again, I think it's a smart move to see stuff to your client at or about what they can buy them for. Then your discount determines your markup rate.
2) BIG JOB
As for that big job, it's also been a golden rule of mine to never take on projects that I wasn't 100% sure I could handle, do right, and do efficiently. Even though we do some pretty large projects nowadays (just ending a $150,000 project next week) there are still several projects each year I either turn down or turn them on to another contractor who is more suited for that job. The last thing you want to do is get into some huge job and find that it's taking you twice as long as you estimated and you underestimated the materials or something. That can nearly put people out of business some times. Work your way up to those big jobs. Don't get greedy and just hop on them because they mean a huge influx of cash. Be careful. It's okay to take on projects that are a little bigger than ones you've done in the past. That's how we grow, right? But taking on a job that is 300% bigger than anything you've ever done before is usually a huge mistake waiting to happen. My advice is to pass on that job if you aren't 100% sure you could do it, do it right, and do it in a reasonable amount of time.
There will be other big jobs that will come your way that will be a little closer to what you feel comfortable doing. Jump on those jobs.
Top Dog Pavers
08-15-2008, 11:30 PM
I usally dont mark up if im recieveing a wholesale-contracter price! If the discount is not recieved i usually mark up 10%. Customers have seen that ive charged more for a product then they could have paid, I just tell them its gas + Material handling charges thats why i mark it up, Cause if a peice of bluestone breaks while on the way to your house, i have to run back and get another on me not on your buck.
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