Why Contractors Charge a Percent on Materials.

In Calgary as elsewhere in the world most reputable contractors charge a percentage on top of materials.  So yes the materials are marked up from the amount that a contractor pays.  So the question is why do contractors charge a percentage.

Fair question, and like any other business a contractor has to bill for his time.

It is a necessity that contractors apply a markup to materials and other supplies. First is that they coordinate the purchase of those supplies and materials, and also account for the amount to the customer as to how it affects the bid. They do a materials takeoff and spend their time, gas, and experience, to attain the best prices, materials, and vendors to buy from.

They provide the service of JIT delivery of these products,  You can’t have 80 sheets of drywall laying around during demo, and framing as they will need to be moved repeatedly and that would then need to be billed separately – you can spend a lot of time moving materials.  They have to provide for safe storage of those materials and supplies which might require some kind of warehousing or other storage.  They take responsibility for those supplies, meaning if during the course of moving a vanity during a reno, it is dropped, they are the ones who are responsible for replacement. They had to pay for those materials and supplies thereby reducing their cash reserves or they have to pay interest on credit cards to purchase all of these things. It all requires man power and truck power.   The supplies and materials did not just show up mysteriously on the job site just in time to use and not a moment before, all of this and more work that went into providing materials and supplies why wouldn’t a contractor deserve to be compensated for these acts?

Contractors warranty their work.  How can the possibly warranty materials and installation of those often “wrong” materials?

A customer that tries to save by going around the contractor should expect to do their own take-offs.  Know without taking the experience and time of the contractor exactly when they are required.  Be responsible for any damage, and any labour involved in moving them to the site, and moving them around the site.  They also need to provide change orders directly to the contractor as to the change in estimate that this provided.  Most importantly they become responsible for any additional labour in providing a poorer quality, hard to install, (often poorer quality tiles can change in size tile by tile by up to 1/4 of an inch – have you ever tried keeping a pattern with such product?  Then at the end expect no warranty on the work or materials installed.

 

Even with Markup it often is the Exact same as you would pay.

Markup often equates to exactly what you would have paid.  We often get contractor discounts that account for the markup and you end paying exactly what you would have-yet receive all the afore mentioned benefits.

You are going to pay one way or another.  The Additional time and effort on site by the contractor or the mark up.  I promise you the job will go easier if you simply trust your contractor that they know their business.

Why Contractors Mark Up Sub-Contractors.

Similar to why they mark up material a sub-contractor takes both time and effort on behalf of the contractor in charge of your basement, kitchen, or Bathroom Renovation.  For example they become responsible for the timelines and the quality of the work of the sub-contractor.  The Sub-Contractor operates also within the contractor’s insurance and permits.   They’ve worked with many Subs and have learned the quality ones from the trouble, and brought that knowledge to the equation.  They walk the sub through the plans, and work the budget and accounting around them.