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  #11  
Old 10-10-2013
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Re: Hiring Contractors - Are component/part prices typically higher than online?

I can tell you how it works for me first in my imagination then in reality. My business is not marine but it works pretty much the same because I have friends in the marine business.

You go on line and get a price for something lets say its $500.00.
I can get it for 450.00 and mark it up 20% to $540.00
If the part is ordered wrong or doesn't work or is the wrong size I've got a relationship with my distributor where I can take care of the problem.
There is probably other parts needed, connectors, wire, tape etc. I've got have boxes and half spools of everything I need from past jobs.
I know what the job is and can quote a pretty accurate price including time and materials.

If I run into a really smart shopper that wants to purchase all their own parts to save money and wants to hang around to make sure I put in my time I have the option of saying OK you purchase all the parts and I'll install everything. My hourly rate is $100 an hour.
There will be a couple rules however. This is a one day job and if the parts I need are not available I have to charge for travel an extra $100 for every extra trip otherwise I'll just wait until you do a parts run.
If you ask for a parts list I'll give you list but many items will take trips to different stores with lots of variations on the part numbers and many require purchase of a full box and of course I can't guarantee the list is complete.
Now when I get on site it is guaranteed that my smart guy will have forgotten something and I get to read a magazine on his clock while he goes shopping for me.
The total bill should be about double of my original quote.

The above is fantasy of course. I would imagine doing it but would never in real life as it wouldn't work out well. The smart guy would be smart enough to not keep his word at the end of the job.

The reality is that I politely explain how I need to make that 20%. If he doesn't figure it out I ask him when it needs to be done. In every case he is so smart he waited until the last minute to think about his project so it is urgent. Whatever date he gives me I polity tell him I'm booked up for 30 days past that date.

If I'm in a really bad mood I'll be really helpful and recommend him to someone else that has pissed me off lately.

The way I figure it is if it is a six hour job at $100 per hour and I'm making $45 on the materials I want to come away with $645.00. We can play with the numbers anyway you want. I'll take $190 an hour and give you the part for free or I'll include free installation if you are willing to pay 1,040.00 for the part.

So someone saying they don't want to pay the 20% markup is no different than them saying they don't want to pay the $100.00 per hour.

The only number that is important is the total. Either it is OK with you or it is not.

It is important of course to get an estimate and have the discussion about how firm that estimate is and how overruns if any are handled.

Details of how they do the work, ABYC standards etc are all good to talk about to find out if they guy is up to date.

Reputation is everything, quality of work and materials is key. A few percent on the materials is so far down on the list it doesn't matter.

You want the guy to like you and feel really guilty if he does anything less than his very best.
One would hope it never happens, and I wouldn't admit to it, but customers that nit over a few dollars markup can get their job "expedited".

If you are knowledgeable about his craft and compliment him on some details of work he will go above and beyond to make sure his craftsmanship is the best. He knows you know what you are looking at, and knows you are looking and care, and are willing to pay.
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Last edited by davidpm; 10-10-2013 at 12:36 AM.
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Old 10-10-2013
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Re: Hiring Contractors - Are component/part prices typically higher than online?

Often times, the cost of the things the contractor gets are higher then the "internet" price or what big box stores sell lthings at.

If people really believe that contractors get a low, lower, or what's called ''wholesale" price on everything they are very mistaken.

Like my trade... Joe customer "found" Freon 22 on Craigslist" will I use it to charge up his DIY ac install? No. end of story.

Does Joe customer care about or have EPA certs? No.

"Oh it leaked out you do have a warranty right?" Yes.. on things we installed and provided. check the disclaimer on the bottom.. it's not in fine print.

Many years ago We used to pick up window ac units in trash. or from demolition piles in houses being renovated. We'd fix them and give them to homeless or aids organizations.. One day I get a call.. "Denise?" "Yes?" "those 3 window units you gave us; one doesn't work.. is there a guarantee on that ?" "click" that was that. never again!
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Old 10-10-2013
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Re: Hiring Contractors - Are component/part prices typically higher than online?

There are some very good points here from the contractor side and the reality is yes they have to make money off the items they purchase for jobs or they would not be in business long.

I use an industry dictated software estimating package that includes material, labor and considered essentials for each task and and industry approved 10% profit and 10% overhead which is shown on each line item and totaled on the summary page at the end of the estimate, I then provide the customer a budget on the materials and explain if they choose a higher than budget item they do not pay just the difference in price but the overhead and profit markup on that item also as there are administrative cost associated with changes.

I will not under any circumstance provide a warranty for something the customer purchases and require them to be present when it is delivered or opened to inspect the item for defects, as it is their warranty.

The reality is I question the costs and rates charged to me in the other parts of my life (mechanics, boat repair, etc.) just like everyone else but end up paying them because I don't do those things, I just don't want to hear that phone call that states "we have this problem and it's going to cost this much more" when that should have been noticed from the get go. I'm lucky there is a sailboat shop where I live, the next closest one is 3 hours away, and while they don't have everything I need I'll buy everything I can from them even though I usually overpay just because I don't want to see them close.

In the end we all overpay for the items we want or need, we just want to be treated respectfully through the experience so as to not feel taken advantage of at the end. Should you research a contractor, absolutely, should you ask for referrals, absolutely, should you ask for an itemized quote, absolutely, should you ask for a discount, that's up to you but if everything is laid out in front of you then there's not really any wiggle room unless they are trying to hit a homerun off you. If there is enough profit for them to use "if you do it now I'll knock this much off" I'd walk away as the only real way to discount something a certain percentage is to have marked up at least that much in the first place.
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  #14  
Old 10-10-2013
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Re: Hiring Contractors - Are component/part prices typically higher than online?

Good discussion on trade markups from both sides of the invoice. It seems most, like me, understand the appropriate need for a markup.

Now let's discuss an issue that really makes the contractors look bad. It's a similar principal other businesses use. "get it where you can" Too often, if there is some reason for a contractor to think they can hit you harder, they do. Not all do this, but many. Enough to give contractors a bad name. This is a phenomenon I clearly saw as I got into bigger boats. I also find it correlated to whether you ever ask for an estimate or question a bill. You don't need to be cheap or rude, but if you just pay whatever they bill without question, they often start getting fatter and fatter. For those of you that are more honest than this, many of your peers are giving you a really bad rep.
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Re: Hiring Contractors - Are component/part prices typically higher than online?

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Originally Posted by Minnewaska View Post
Good discussion on trade markups from both sides of the invoice. It seems most, like me, understand the appropriate need for a markup.

Now let's discuss an issue that really makes the contractors look bad. It's a similar principal other businesses use. "get it where you can" Too often, if there is some reason for a contractor to think they can hit you harder, they do. Not all do this, but many. Enough to give contractors a bad name. This is a phenomenon I clearly saw as I got into bigger boats. I also find it correlated to whether you ever ask for an estimate or question a bill. You don't need to be cheap or rude, but if you just pay whatever they bill without question, they often start getting fatter and fatter. For those of you that are more honest than this, many of your peers are giving you a really bad rep.
Hence the reason to get an itemized quote and budget prior to agreeing to have the work performed, this alone weeds gouging as you can verify pricing and quality of the materials used.
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Re: Hiring Contractors - Are component/part prices typically higher than online?

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Originally Posted by CatMan22 View Post
Hence the reason to get an itemized quote and budget prior to agreeing to have the work performed, this alone weeds gouging as you can verify pricing and quality of the materials used.
My yard is going on three weeks to estimate an injector cleaning, valve adjustment and prop seal replacement. Nothing too complicated there. Do you think they really want to itemize? It gets ridiculous sometimes.
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Old 10-10-2013
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Re: Hiring Contractors - Are component/part prices typically higher than online?

What I apprecited about Haven Harbour is that they understood that there were inefficiencies in the way my repairs were done. There was a lot of stopping and starting, which meant bringing tools aboard and setting up, then breaking everything down and cleaning up after each iteration. The delays were not my fault (their priorities and difficulty finding some parts were the root cause), and in the end they knocked time off my bill to offset some of that.
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Re: Hiring Contractors - Are component/part prices typically higher than online?

I generally find most contractors to be honest and they do deserve to make some profit on the resale of equipment being installed to cover their over head and potentials "call back" costs. In construction, I generally see a 10% mark-up on what the contractor pays for materials.

A little off topic but the professionals that raise a red flag are residential building architects. Generally these folks charge a percentage of the final overall cost of the finished building. Now why should an architect get paid more money for specifying a granit counter top over formica? Or specifying cedar shingle sinding as compared to vinyl? Its the same amount of labor involved. Just because the client wants to spend more on the building materials or finishes, why should the architect get paid more?
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Re: Hiring Contractors - Are component/part prices typically higher than online?

jasn,

Someone posted this article in another thread...you may find it pertinent.

YMMV
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  #20  
Old 10-10-2013
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Re: Hiring Contractors - Are component/part prices typically higher than online?

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Originally Posted by casey1999 View Post
I generally find most contractors to be honest and they do deserve to make some profit on the resale of equipment being installed to cover their over head and potentials "call back" costs. In construction, I generally see a 10% mark-up on what the contractor pays for materials.

A little off topic but the professionals that raise a red flag are residential building architects. Generally these folks charge a percentage of the final overall cost of the finished building. Now why should an architect get paid more money for specifying a granit counter top over Formica? Or specifying cedar shingle siding as compared to vinyl? Its the same amount of labor involved. Just because the client wants to spend more on the building materials or finishes, why should the architect get paid more?
Possibly you don't realize the architect is the one that designed the building, house et. While something like Formica or granite may seem silly the larger picture. It is how the person makes their living. example; A couple; "We want a beautiful home located on the land we have, and needs to be .... and.... with.... but should also have... "

The architect is usually selling a dream or a design taken from a concept. Those plans, with all those stamps of approvals for zoning, design, soil and water table testing...stress, span, durability, much of this, is work that needs to be done long before a build is started. Often .. the architect is passed over .. just like the artist... Unless there's a failure or bad design then it's WHERE'S THE ARCHITECT!

I've worked with many over the years. many are highly qualified and know their field of endeavor. They actually do know if that house the couple "dreams" of will still be standing after the first hurricane.. not always but most of the time. In my book, architects are the artists of building and building design. Many times someone tries to circumvent them and not pay them for "just a set of plans"

Your boat floats and handles well because someone designed it and was paid to make that happen.

"mark up" = lay person's term for something they are clueless about and try to give it a name.

10% to a contractor for materials.. they might just as well not even do business with the tightwads. out to beat them even before they meet!
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