Clipfert has a lot of good advice.....
Yes, you are marking up product WAY WAY WAY too much. I wish we could mark up product like that and still land jobs. Maybe if I had a labor rate that low it would sometimes work out. But that's the wrong way to do it.
First of all, you have to stay somewhat competitive. Nobody else is going to be marking up materials 200% or 300%. That's ridiculous. What are you going to say when a customer asks you what portion of your "lump sum" bid is materials? You going to lie to them? Make something up? Give them the real cost? Either option is a bad way to go. It's best to just mark it up by a percentage that is fair and then make your money on the labor.
Now what is a fair mark-up? Well, your customer isn't going to want to pay a whole lot more for materials from you than he would on his own. He may allow you to charge a little more for your procurement time. But not 200%. There's a really easy rule-of-thumb for how to charge for product: Charge what the customer would pay on his own if he were to buy that same product. In other words, they pay you RETAIL PRICE.
What that means is that sometimes you'll make a really good mark-up, because the price you can get things at is at a deep discount. Other times, it means you don't make as much, and then you may have to add 20-30% for your procurement time (and warranty).
Plants, I am able to buy for about 50% off what the customer would buy them for. But I can't even sell plants at full retail because most of my competitors sell them for less than retail. So in order to remain competitive, we mark up plants only 30%. That's more than fair. We make a good profit on them and it covers our procurement time. Actually, there's very little procurement time. Maybe just my time ordering them, because the nursery I use delivers them straight to our jobsite.
Raw materials like barkdust, soil, gravel, aggregate, sand, mulch, etc. I can only mark up maybe 20% in order to remain competitive. But that's fine. 20% is a totally fair and normal markup in our industry.
Irrigation parts & materials I can mark up quite a bit. Because I get most of them at 50% off and they have nowhere to buy them that cheap. So I can mark them up at least 50% over my cost and still be under what they can buy them for. Let me provide an example. Let's say a rotor head lists for $20.00. I get them for $10.00. I can mark them up 50% to $15 and still be under what my customer could buy them for. So irrigation materials mark-up is about 50% for us on install jobs.
Sod, I cannot mark up too much. For one, because we only get like a 10% discount. For two, people call and find out how much sod costs and if I marked it up too much, they'd call me on that. So we mark up sod about 20% from our cost. And 20% is still a decent markup for something that takes only one phone call and is delivered.
Outdoor lighting is our biggest profit margin item. We get about 60% markup on that product. Which is really nice.
Our labor rate is $60 an hour and that will probably go up to $65 in 2014. That is where we make our profit and cover overhead. Anything else we get on material mark-up is just bonus.
Also, giving a "lump sum" bid might work if all you're ever going to do is small jobs in the $2,000-$10,000 range. The main problem with the "lump sum" price is that people feel you are not justifying how arrived at that number. A lot of people are going to be thinking, "What??? $7,500 for some planting beds??? How the heck??? That seems outrageous!" And they'll start shopping you. In the end, they'll probably find out that the price wasn't too awfully bad, but now that they've talked with several other contractors they decided they liked another one better. So you lost the job because you scared them off, initially.
I eventually learned that our customers like our bids broken down by detail. Then they would look at my bid and think, "What??? $7,500? How the heck.....Let me see.....Ok....$1100 for the plants... I guess that sounds about right....$2200 for the trees....yep.....$400 for planting soil, Oh yah, I guess we need that.....$50 for planting fertilizer, yah, I guess we need that.....$250 for bark mulch to finish off the beds, guess that makes sense......$340 in irrigation materials, yah, I guess that seems fair since there aren't any sprinkler heads over there..... and $3160.00 for labor.... I guess that sounds about right. Wow! That all adds up to $7500, huh??? I guess so. Ok. I guess this seems fair." Then we have a better chance of landing the job, because we broke it down for them and they can see all of our pricing is fair and well thought out. We're being completely up front about every cost. Customers like that.