How do you answer "just give me a price for labor, I'll buy all the materiel"?

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petersonra

Senior Member
Location
Northern illinois
Occupation
engineer
When a contractor asks the customer to supply the material, I usually assume that they don't want to tie up their own money in the job (read: can't). It's a red flag for me, at least.

I hired a guy once to install windows and siding. He measured all windows and gave me the sizes so I could buy them. He went defunct during the siding part of the job and I had to find someone to finish it.
 

rt66electric

Senior Member
Location
Oklahoma
sure as long as you buy it from "my supply house"

sure as long as you buy it from "my supply house"

My "supply house" is behind "my house" and full of leftovers from other jobs.

the customer is floating money on "6 months no interest" Blue card

another comeback is to promise to "show them the receipt" , they are often just curious as to the actual cost of parts
 

jerryalan

Member
Location
Perry, Mi. Shiawassee
Occupation
electrician
If you don't have any markup on material, What pays your overhead ? Just your hourly rate ?
if i were a factory or fast food worker i'd be responsible for my own overhead, vehicle, insurance, tools etc.
i place an order for material the distributor will warrant, i guarantee the instal and material.
the distributor delivers the material to the jobsite and i take responsibility until i turn the job over to the client.
i get 30% up front, 30% when i begin and the final 30% upon completion. the customer likes the 10% and i'm content with the 90%.
i've had pretty good luck doing business this way for quite awhile.
yes, my hourly rate satisfies my monetary needs . . .
 

Carultch

Senior Member
Location
Massachusetts
Tell him that on his way to get your materials he can stop at the grocery, pick up some steaks, & take them to "Outback" steak house and have them cook them for "labor only"!;)

On a similar note, I've got a little joke for you, Little Bill.

Two lawyers walk in to a bar, each carrying a paper bag with a sandwich from home. When they sit down at the counter and start eating, the bartender says, "you can't eat your own sandwiches in here." So they look at each other, wink, and exchange sandwiches.
 

jaggedben

Senior Member
Location
Northern California
Occupation
Solar and Energy Storage Installer
For a while we were getting these inquires regarding solar equipment. 'Hey, I found this really great deal on solar panels and inverters, $1.50 a watt! What would you charge to install it for me?' And we're like, 'Well, we'd charge you $4 a watt if we supplied the equipment, and we can actually get the equipment for $1.30/w because we're a dealer. Plus it'll cost us a bit if you make any mistakes. So, how about $3/watt to install, meaning you pay 50 cents more? Deal?' That's when those customers realize that if they can't do it themselves then they can't afford it.
 

JoeyD74

Senior Member
Location
Boston MA
Occupation
Electrical contractor
As long as you make your money on the job, why not do it? If the job is 12,000 and your cost on material was 3500, then the job is $8500.
 

kwired

Electron manager
Location
NE Nebraska
As long as you make your money on the job, why not do it? If the job is 12,000 and your cost on material was 3500, then the job is $8500.
I have no problem with that, what I have a problem with is extra time spent because they did not know what to select, how much was needed, things of that nature especially if they hold up progress, as well as any expectation that you should come back and fix problems if they selected what you consider inferior products. This is usually a problem with homeowners that want to be cheap. I've had commercial/industrial regular customers that have their own maintenance shops and supply rooms - they order materials from same suppliers I purchase from. I can give supplier a PO for the client and it runs through their account. Warranties on products is between them and supplier, if I am involved I still make my usual labor rates. But you get that situation because the client trusts you, they understand things fail, and usually lost production costs more then your labor so all they want is to get things running again. Homeowners are the ones that are out to get everything they can - not all of them but probably at least two thirds of them.

Add: however in your example of 12,000 job, 3500 materials does not yield 8500 profit, you still have other costs to take away before you have profit, unless you have no insurance, no tools, vehicles, employees, etc, plus the customer provides you food and housing during the duration of the project.
 

iwire

Moderator
Staff member
Location
Massachusetts
As long as you make your money on the job, why not do it? If the job is 12,000 and your cost on material was 3500, then the job is $8500.

We mark up material.

So if the labor is $8,500 and the stock cost us $3,500 the job would be more than $12,000.

We make money selling materials.

Besides that there are the real issues kwired pointed out. Wrong material provided, not enough material and warranty issues.

This is not to say we never do jobs that the customer provides material just that we would price the job knowing that.
 

kwired

Electron manager
Location
NE Nebraska
Big difference between Lowe's getting the materials list correct Vs. average Joe Homeowner getting correct materials for his house. New house - he may have some chance but take a smaller project that doesn't have well documented plans and that margin of error gets even higher.

National chains - they sometimes want same thing at every store and have purchasing power to get items that you can't otherwise get very easily sometimes because they put in their own customized order for the item(s). But even common items, their purchasing power may be enough they want to go that route.

A little off topic - local owner of a Subway restaurant had to change their prep table equipment per franchise rules. They had to use the same equipment you are seeing in newer stores - I imagine they had contracts with the equipment manufacturers to make these in a particular fashion that is like no competition has. Same local owner also said they had to destroy the old equipment and sell as scrap even though nothing was wrong with it - Subway doesn't want it in competition hands.
 

iwire

Moderator
Staff member
Location
Massachusetts
Big difference between Lowe's getting the materials list correct Vs. average Joe Homeowner getting correct materials for his house.

You really think so? :lol:


Joking aside I can tell you they do a pretty good job knowing what is needed. That said it can still be problematic for warranty issues, delivery dates etc.

National chains - they sometimes want same thing at every store and have purchasing power to get items that you can't otherwise get very easily sometimes because they put in their own customized order for the item(s). But even common items, their purchasing power may be enough they want to go that route.

Absolutely, that is why it is very common for them to supply the lighting, distribution and sometimes fire alarm equipment. Prebuilt electrical rooms or 'walls' are very common with chains.

That still does not change the fact that with them supplying the material things get more complicated and we have less leverage to get stuff shipped or replaced. It is still going to change how the estimators price the job.

Here is an example of the added costs and Peter D can remember this one.

I ran a retail store fit out, it had about 550 - 8' fixtures. They supplied them, they shipped them to the store. Our contract required we inventory them immediately and report any problems. If we did not we would be responsible for any shortages. Sounds fine to you realize they shipped the fixtures on different trucks on different days, in different stages of assembly, under different part numbers. Also all the mounting hardware came just as mixed up It was a couple of days of to figure it all out. Their supplier does not care how bad it hurts the EC and we have no leverage with them. Their supplier only cares about keeping this national account happy.

They also supplied 'knock off' plugmold that fell apart as you installed it. Normally we would ship them back to our supplier but in this case we just patched them up and installed them.




So yes while the scale is much larger the same types of problems pop up when the EC is not in total control of the material. :)
 

JoeyD74

Senior Member
Location
Boston MA
Occupation
Electrical contractor
We mark up material.

So if the labor is $8,500 and the stock cost us $3,500 the job would be more than $12,000.

We make money selling materials.

Besides that there are the real issues kwired pointed out. Wrong material provided, not enough material and warranty issues.

This is not to say we never do jobs that the customer provides material just that we would price the job knowing that.

My example was the job you would bid at $12,000, your actual cost on parts was $3500 leaving $8500 left over. That number has all your profit and markup in it already. If a customer wants to supply the parts, I still need to profit the same amount of money on the job regardless. Does that explain it? I should have posted it like that in the first place.
Any material shortages or wrong material results in a change order to correct it.
 

kwired

Electron manager
Location
NE Nebraska
You really think so? :lol:


Joking aside I can tell you they do a pretty good job knowing what is needed. That said it can still be problematic for warranty issues, delivery dates etc.



Absolutely, that is why it is very common for them to supply the lighting, distribution and sometimes fire alarm equipment. Prebuilt electrical rooms or 'walls' are very common with chains.

That still does not change the fact that with them supplying the material things get more complicated and we have less leverage to get stuff shipped or replaced. It is still going to change how the estimators price the job.

Here is an example of the added costs and Peter D can remember this one.

I ran a retail store fit out, it had about 550 - 8' fixtures. They supplied them, they shipped them to the store. Our contract required we inventory them immediately and report any problems. If we did not we would be responsible for any shortages. Sounds fine to you realize they shipped the fixtures on different trucks on different days, in different stages of assembly, under different part numbers. Also all the mounting hardware came just as mixed up It was a couple of days of to figure it all out. Their supplier does not care how bad it hurts the EC and we have no leverage with them. Their supplier only cares about keeping this national account happy.

They also supplied 'knock off' plugmold that fell apart as you installed it. Normally we would ship them back to our supplier but in this case we just patched them up and installed them.




So yes while the scale is much larger the same types of problems pop up when the EC is not in total control of the material. :)
I have never done a project for such a company, any national companies I have done work for were smaller scale projects. But one learns fast how they work and bids accordingly.

My example was the job you would bid at $12,000, your actual cost on parts was $3500 leaving $8500 left over. That number has all your profit and markup in it already. If a customer wants to supply the parts, I still need to profit the same amount of money on the job regardless. Does that explain it? I should have posted it like that in the first place.
Any material shortages or wrong material results in a change order to correct it.
You did not mention what any other costs were and it seemed to indicate that 8500 was pure profit.



You don't have to sell material to make money, it is just one item you can mark up to make some profit. If the buyer keeps from micromanaging the project and only looks at the net cost (and maybe performance/what he will receive for that cost) - I could bid $12000, with 3500 in parts and the rest labor less permit fees and other minor items. You could bid same $12000 but with 5000 in parts but less labor and same permit fees and other items - still cost owner same $12k, each bidder may or may not have same profit depending on their overhead costs.
 

JoeyD74

Senior Member
Location
Boston MA
Occupation
Electrical contractor
You did not mention what any other costs were and it seemed to indicate that 8500 was pure profit.



You don't have to sell material to make money, it is just one item you can mark up to make some profit. If the buyer keeps from micromanaging the project and only looks at the net cost (and maybe performance/what he will receive for that cost) - I could bid $12000, with 3500 in parts and the rest labor less permit fees and other minor items. You could bid same $12000 but with 5000 in parts but less labor and same permit fees and other items - still cost owner same $12k, each bidder may or may not have same profit depending on their overhead costs.
The numbers were just numbers. It doesn't matter what you carry for profit on the job or how you even come up with it. If the job was to bid at X and you got that by adding up labor, parts, over head and profit, I'm saying I would only subtract my actual costs on material.
 
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