I’m curious what others are marking materials up at. I’ve got a client that is barking up a storm about my 6.5% markup on materials. Am I too high?. Or is that in the ballpark. I’m guessing some of you might be thinking of you response being something like “it’s what ever you want to charge and what the market will bear” but I’d still like to know a ballpark idea.
Thanks
BjR
Replies
What others mark up their material has no value to you whatsoever. Figure out your markup as a factor you need to sustain a viable business. Your question is just another testament for going towards a lump sum price.
At least 20% here.
walt stoepplewworth has always advocated .67 ( 1.5 )
so figure 1.3 for overhead & 1.2 for profit
the insurance industry in our area has ALWAYS accepted (1.25 )
which is 1.15 for overhead & 1.1 for profit
if you work with insurance industry markups , you will probably go broke... unless you can account for every pencil , paper & paperclip that goes into a job
charging Markup in T&M work is much more difficult that using those markup figures to arrive at youu FIXED PRICE contract price....
then , what you markup your costs is no one's business except your own ( and of course, you would share it with us here )
know your costs, do your estimates, then SELL the jobMike Smith Rhode Island : Design / Build / Repair / Restore
Does Walt recommend putting supervision costs above or below the line?Our markup is structured to follow the PROOF system (I maintain a version of Jerrald's excel worksheet that keeps tab on things) but if you break it all out according to my annual sales projections, we mark up labor +burden, materials, and sub costs 25% for a 20% margin.I do figure all supervision/project management costs as job costs. The only non-billable hours once a job has begun is my time spent preparing invoices, some change orders (such as to credit the HO back when they spent less than the allotment), etc.
Jon Blakemore RappahannockINC.com Fredericksburg, VA
i don't remember what Walt says about supervision
we use 25 field production categories and about 6 office categories
if i'm in the field, my time goes to one of those 25.... unless i'm just supervising too many operations to make a break-down stupid... in which case i put it in my catch-all
#26 ( field supervision )... as you might guess .... i keep the worst time record of anyone...
now... when i was on someone else's clock ( or when we're doing T&M ) .. i do manage to keep good track
here's the back of Roy's..... the front has a recapitulaion and a list of the 25 categories
View Image
Mike Smith Rhode Island : Design / Build / Repair / Restore
Edited 12/2/2007 7:26 am ET by MikeSmith
OK, got that. Nice. How about a look at the back side too?View Image “Good work costs much more than poor imitation or factory product†– Charles GreeneCaliforniaRemodelingContractor.com
here u go... these are 8 1/2 x 5 1/2 so my printer gets 2 from each letter size cardstock
View Image
and i can get a copy of the front & back on 1 sheet if i need documentation
View Image
there are also 2 codes not on that list that get used a lot
00..... clean up & 01.....mobilization / demobilization
Mike Smith Rhode Island : Design / Build / Repair / Restore
Edited 12/2/2007 4:15 pm ET by MikeSmith
Edited 12/2/2007 4:16 pm ET by MikeSmith
Edited 12/2/2007 4:17 pm ET by MikeSmith
That's a good system Mike.
Cool! I think I'm gonna copy that system. I've been using a much cruder system, and I start a new employee tomorrow, think I'll try and get something like that printed up for him. Thank you!View Image “Good work costs much more than poor imitation or factory product†– Charles GreeneCaliforniaRemodelingContractor.com
Huck,Just a word of advice with the timesheets. When I first created our timesheets, I used examples from Mike Smith, Jerrald Hayes, and a several others I found at various places online.The first iteration was way too in depth for us. The information would be really specific, but getting the field workers to give accurate data and the time spent on entering all those categories into our accounting software made it too cumbersome. Maybe you don't have my tendency to overdo things like that, but I thought it was worth passing along.I've posted a copy of our current timesheet.
Jon Blakemore RappahannockINC.com Fredericksburg, VA
Thanks Jon - that's a good one - saved it in my documents. What's MEP? Also, you don't perchance have a filled-out copy, like Mike did, do you? Just starting a new guy tomorrow, I'll try it on him, and see how he does.View Image “Good work costs much more than poor imitation or factory product†– Charles GreeneCaliforniaRemodelingContractor.com
Huck,"MEP" is Mechanical, Electrical, Plumbing. In VA, you need to have a license to work on any of those three, so the amount of work we do is insignificant enough to get a separate designation.
Jon Blakemore RappahannockINC.com Fredericksburg, VA
Mike are those codes industry standard cost codes or are they just what your company uses?
BjR
those are the codes from Cost of Sales that my accounting system uses ( GC-Works ....... newer version is called BuildWorks ......)
the system can be run with either the standard 16 CSI categories .... or the 25 categories that Synapse developed that follow job sequences....
whe i set the system up in '98 i looked over the CSI and the Symapse 25 and decided i like the 25 better than the CSI
here's a link to BuildWorks... you can download trial templates
http://www.synapsesoftware.com/downloads.html
Mike Smith Rhode Island : Design / Build / Repair / Restore
when you say your do not bill your invoice or change order writing do you mean you do not bill the customers or do you not bill them to the job?
If you are spending time for a particular job doing administration work, why is not billed to that job?
Neil,I was kinda confused with your question at first because I thought "why is he asking that, I do bill invoicing and CO time to the job" but then I realized that I wrote it completely wrong the first time (maybe because it was almost 2AM?).Most of our jobs are fixed price, so T&M would be handled differently. I use a "Project Management" category for meeting with subs, material logistics, invoices, client meetings, etc.The few T&M jobs we have done, I don't bill for "office" time (preparing invoices, etc.). Maybe that should change, I don't know. But like I said, our T&M volume is very low.
Jon Blakemore RappahannockINC.com Fredericksburg, VA
Who is Walt Stoepleworth? Forum member?
Building industry financial expert?
BjR
<Building industry financial expert? >
Yep. King of the 67% markup on all direct costs.
Forrest - Walt this way
walt is one of my first teachers when i went into business
http://www.hometechonline.com/profou.htmMike Smith Rhode Island : Design / Build / Repair / Restore
Thanks
BjR
yur way low...
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20-40% here. Based on size of job and quanity. If we are doing a kitchen then 20%. If a small repair 40% with a minimum of $20. DanT
Gotta' go with Walt - at least fight that direction.
Forrest
I'd be losing money if that was all I marked the materials up.That used to be enough to cover my insurance and overhead, but no more.
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From Arlington, VA. I've seen 25% to 55% markup on materials.
Very good. Thanks for the input. I'll be raising my markup.
BjR
the way i do it is order extra parts then resell the extra parts to the next client true i may have to hold on to the parts for a while but over time i can do a whole job aall profit . my mark up varies if im doing a job with a lot of copper and fittings verses abs pipe . this way i show no mark up and the client is happy.
the way i do it is order extra parts then resell the extra parts to the next client
this way i show no mark up and the client is happy
Some day one of those happy clients is gonna sic the law on you.
Joe H
30%.
We'll see how that goes and if necessary adjust up or up according to the market.
FKA Blue (eyeddevil)
So do you mark up subs at the same rate too?
BjR
yes
FKA Blue (eyeddevil)
All direct costs get the same mark-up (your hourly included) per Walt S. I don't get all the jobs I bid since I learned this, but I make more.
Forrest
30% should do just fine in your area Jim. Thats probably a little low but I dont know thats just heresay.
Good luck.Where there's a will, there are 500 relatives
25%
Totally dependent on what is meant by "materials."
If it is gypboard and mud, that is one thing, but if it is something totally custom to the job with a piano-like finish, it is another.
In my niche, it can be between 75 and 150 percent of cost.
I have to agree.
I am assuming that this is a small T&M job..........
If you are doing a small handyman type project, and are charging by the hour for shopping, and have developed an hourly rate that covers all your profit and overhead, and you are not waiting for your money, you may be OK charging a small markup.
The customer may feel that if you are getting paid hourly for your trip to the store, and are shopping with their money, no markup is justified.
If you are fixed price, you need not show your costs. If you are T&M, you need to have an agreement in advance to address how material purchases are handled. If you are going to see the job, then decide what is required, while onsite, you should try to offer a fixed price based on materials and labor while there.
I read on a thread elsewhere, that the tech would call the office, typically get an answering machine, have a conversation discussing what is required, and go back to the customer, and say that the office figures the job to be $####.xx would you like me to get started? This ploy made it easier for the tech to be liberal with the price, and include a proper markup, which in this scenario was basically taking what he thought the job would cost, and double it.