Greetings all;
I have been reading the old boards for a while and have a question. I have recently started my own company. Mostly remodels and small building projects, so far so good. I have a new customer who would like to supply material for her decks and roof. She thinks she will save money this way. I have already given her a written estimate. Should I adjust my prices or walk? The contract has not been signed yet.
Thanks
Bryan Fleury
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One reason why I use the Proof Mgt. system whereas I put all overhead and all profit on my labor.
I'd adjust your price to include the net profit you will lose. It's also important to rewrite your Proposal and specifically state that if you are delayed for any reason because of being short of lumber or too many pieces not being usable, there will be a charge if you have to quit work and return on another day. Or if two deliveries are made and consequently there are different widths or thicknesses of the lumber. Time is money.
Also, absolutely not guarantee on materials.
Bryan,
Ditto what sonny said.
I also figure my profit and overhead on the whole job as a separate line item. I don't mark up materials per se. If they insist on buying something which frequently occurs, I just deduct it out at cost. That way I still make my prof/ovh.
Generally, I ask them what they hope to accomplish by purchasing materials themselves. If there are genuine savings because their brother owns the lumber yard or something of that nature then I am all for it. Of course they will be responsible for returns, running for material (be sure to have them order plenty extra) and any other associated tasks. I would also direct them to the appropriate clauses in my contract that state, among other things, that there is no warranty on owner supplied materials.
After all of this is explained to them, most opt to let me buy the materials.
Tom
When I have clients who want to supply their own materials I let them, provided they provide ALL the materials and take charge of getting them to the job. Part of my profit from the resale of materials at a markup covers freight, handling, dealing with store clerks and traffic. If the client wants to do it and save you the headache and assume ALL responsibility for the materials, theen let them.
I patiently explain to them that they will be paying me an hourly rate for sitting and waiting while they fix their screwups for getting the wrong stuff. I have NEVER had a custome save money by doing this for themselves. Part of the skills we acquire is that of knowing what we need to do the job with and whjo is best to order from.
If I screw up or my supplier, it doesn't cost the customer more but if they do it, they pay. I can't be penalized for their ignorance or negligence.
I'm betting that you can't either.
Excellence is its own reward!
Bryan, I only supply labor, so I'm always at the mercy of the material suppliers. Experience has taught me to only deal with competent builders that can get the right materials onsite in a timely manner. I don't have any fancy contractual language, I just never work for a guy twice if he's incompetent.
Actually, if the homeowner wants to supply, you will be let off the hook for a lot of warranty issues. Of course, if you cut one board wrong, they will want you to pay for it....
That reminds me of a long drawn out negotiation I had with a DOCTOR!. He wanted me to hang an expensive interior French door, labor only. I agreed, only if he understood that if I cut the door wrong, that he would be responsible for getting a new one in there.
He balked. He wanted me responsible. I told him that if I wasn't making a profit off the material, then I wouldn't accept the responsibility. We debated the issue. Eventually, he agreed to pay me $100 more to accept the responsibility.
It was a pre hung door!
We both walked away happy.
Just negotiate the deal to get you what you want. If she makes you do the order, charge her for it. No matter what, insist on the yard sending out 20% more to allow for culling. That's only fair, because the lumber graders are allowed to include 20% of substandard materials..
blue
Bryan:
When I figure my stairways, I add up my costs for the materials, and add 50%. Then I figure labor seperate. Its kind of a nice cushion should I underestimate my time.
Recently I had a client that wants to supply the balusters, newels and railing. I showed him my cost for these items, and took them off our agreed upon price.
I am still making my 50% markup on the parts that he is buying.