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Old 10-09-2013
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Hiring Contractors - Are component/part prices typically higher than online?

I realize that many folks who post here are DIY'ers but for expediency, I'm going to go the route of hiring contractors for most of the bigger projects for the refit of my 1991 35' sailboat, here in Annapolis, MD. USA.

As I begin organizing the various systems contractors and start fielding estimates, I'm curious about normal industry practices. Specifically, is it normal practice for a contractor to make money on the parts/components that they sell you as part of a project?

Using an electronics contractor as the best, and most obvious, example, if I were to hire one to put in brand new electronics on my boat, in addition to paying them for system installation, would they expect to charge me more for the electronics components, (GPS, radar, etc.), than I could buy them for online?

I understand that this is a generalized question and it may be difficult to provide an answer. I ask simply because in the computer industry where I come from, this practice has faded over time. Just looking to minimize any surprises.

Thanks..
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Old 10-09-2013
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Re: Hiring Contractors - Are component/part prices typically higher than online?

Yes, I would expect some markup. It really depends though, if the contractor maintains inventory of electronics or display models then the costs would be higher than if they only order electronics after an order is placed.
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Old 10-09-2013
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Re: Hiring Contractors - Are component/part prices typically higher than online?

The yard that I used in Rock Hall (Haven Harbour) shopped around to get good prices, and the prices they got were as good or better than what I was able to find online. While I agree with Peoples, I would expect a mark-up, it doesn't always happen.
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Old 10-09-2013
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Re: Hiring Contractors - Are component/part prices typically higher than online?

First you select your contractor. How do you find a good one ? (You tell me and we will both know.) You sound like you have a pretty good idea what the components will cost so if you can get the guy to tell you his hr./rate and tell him to list parts and time separate maybe you'll be ok . Here is something that just happened to me . I had a re canvas job done, got everything up front and on paper. Lots of problems , real long story short in the end I find out the guy was using 2nd. grade canvas . I kind of had a feeling this was going on , the guy told me to be more careful and that I was causing these little imperfections in the canvas . Then the other day a friend and I were talking and he said I by 2nd. grade cause I get it cheap ! Moral of the story? Take your time don't do it all at once, one project at a time . Talk to other people and maybe you could get some good referrals . And that's a big maybe .
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Old 10-09-2013
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Re: Hiring Contractors - Are component/part prices typically higher than online?

When we had our engine installed our marina passed on its discount. I knew how much the engine would have been had we installed it ourselves because for about twelve seconds we thought about doing it so I know we truly did get the discount.

That was just for the cost of engine. I'm sure they regained that money in the labor cost.
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Re: Hiring Contractors - Are component/part prices typically higher than online?

Start this way. The contractor has to sell the part to you for more than they paid for it, just to break even on the time it took to look up the proper part number and order it, receive it and bill it. If it sat in inventory, then they need to collect the cost of the money sitting around too.

They can often buy cheaper than retail and, therefore, that markup is right back to regular retail. Sometimes not.
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Old 10-09-2013
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Re: Hiring Contractors -RANT

Post like this kinda irk me, I'm sure it must irk other contractors. Why do people that do not have the knowledge or know how to do something; ask for quote then try to beat the contractors in a game that doesn't really exist? Don't hire them if your so good at their job!

Mark up = is what non-contractors think, contractors do. Reality = contractor uses certain suppliers or vendors; spends the time doing the leg work, travel and more. In my case it's at least 20%. even if YOU buy the part! So.. your $99 part that I quoted at a cost of $120 will still cost you at least that much if you buy it.. and if you buy it I WILL NOT eat the labor, shipping, wrong part, and delay costs, caused by you getting the part!

Owner goes online find that part or component.. sees price.. doesn't see the time it takes to pick up, arrange dates for delivery, AND assumes the contractor will install and warrant a part or component they did not obtain.

Things contractors hear all the time... usually 2nd hand,

"Well they did the work, they "owe" me....

"Ha, they are going to rip me off"

"I could do it way cheaper"

Did you see the price of....? They charged me.....$! for the same part!

The the one that really gets me angry.. The owner talks to everyone but me the one they hired!!

Common to this thread.. COMMUNICATION IS CRUCIAL!

if need be I can quote right down to every sheet metal screw required and used on one of my jobs... and put it in a contract I'm sure marine contractors can also.

Bottom line. Most contractors are just trying to make a living! Most do not need to rip off people to make a decent living doing what they do best.
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Re: Hiring Contractors - Are component/part prices typically higher than online?

Thanks for the replies from folks sharing their experiences.

As I mentioned in my original post, I'm trying to understand what's considered normal practice in this industry. I'm pleased to hear that for some contractors, if there is a markup, it's a reasonable one. I'll keep my eye out for those folks.

Jason
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Re: Hiring Contractors - Are component/part prices typically higher than online?

The way I look at it, Minney is probably right, the contractors can get it cheaper and thus can sell it to me at "consumer cost." If that's true, then I'm happy to pay the consumer cost. I don't mind paying a bit more, either, especially if they are doing serious legwork, or if they are footing the bill up front for an expensive part.
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Old 10-09-2013
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Re: Hiring Contractors - Are component/part prices typically higher than online?

I just bought $1000 in materials for a cabinet job today. Not on that invoice (and I do get my wood 10% off retail) is the $30 in gas; five hours driving, selecting, and loading the wood; a portion of the flatbed trailer used to haul it; any interest on credit cards or accounts (not applicable here); and oh, that Check Engine light reminds me I need a $100 oxygen sensor in the work van. Might also work back to the hours spent calculating bills of materials; sourcing the lumber; providing color samples; and so on. And the $65 just spent on printer ink.

None of that time ends up in the labor calculation. Yet these are real costs & need to be covered if your biz is to survive. Plenty of ways to address overhead, some more transparent than others.

You can mark up materials without telling the customer. Plumbers do this & it makes people mad when they see the same elbow at 1/3 cost in the store. Plumber often has good reason for the markup, but it looks shifty.

You can build overhead into your shop rate; that's one reason marinas charge $90 an hour for labor. Don't think the dude with the pressure washer is taking that much home. You are paying for the dude, the pressure washer, the water bill, and so on. Tying overhead to labor hours means you'd better be good at time estimates. It can shift the total cost one way or the other drastically.

For my biz, I avoid hidden markups on materials & on labor rates. The client pays my delivered cost on materials. Labor is a flat hourly rate. "Overhead" appears as a separate line item: 35% of materials cost. When all is said & done & purchased, the clients are paying $700 in overhead costs for this job. Since I frequently misjudge how many hours a job will take (always to my detriment), at least tying overhead to materials ensures operational costs are met. If I eat the extra hours, I eat them. The business gets paid.

My clients seem to appreciate this transparency, but other businesses arrange markup in other ways which are equally valid. There are costs that are neither materials, nor labor, nor profit, nor taxes. They are still real costs & must be covered if a business is to live.
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