You can, and should charge a markup on any material you use on a project. The cost of any material you supply should include a standard minimum mark-up of 42%. Wait, FOUTY TWO PERCENT??!! Yep, and here's why:
If you run a contracting business and are not adding markups to the products you buy, you are actively losing money. Remember, your customers do not want to work with a struggling business so make sure you are profitable, so you can provide the best service.
When estimating jobs, make sure to consider these markups before giving a quote. This will ensure you don't have to go back to your clients for more money later on.
If your customers have questions about material costs, this guide will help you easily explain the added expenses of acquiring materials for their house.
10% Transportation/Freight
Your clients are not entitled to free supply runs when something is needed for their job. You must maintain and insure commercial vehicles, do pick-ups at the lumber yard, etc. Time you spend off the job-site costs money, and should be billed accordingly.
10% Expert Advice and Professional Resources
Your clients are not entitled to discounts on their materials just because they've hired you. Do not pass along discounts given to you by your specialty trades or material suppliers! These are for your business benefit only.
7% Receiving & Inspection
Inspecting deliveries for damage and accuracy can be an involved task that often requires hiring additional labor.
5% Storage & Handling
Plan for the cost of storing materials away from the job-site. Even if you're storing them at your personal residence, it still comes at a cost that should be passed on to the client.
As an added value, you can increase this percentage by offering the donation of existing appliances, fixtures, and materials to local non profit organizations and providing a donation receipt to your clients.
8% Loss, Damage, or Return Management
When you include finishing materials like paint, tile, and cabinets in your bid, you take responsibility for these materials from end-to-end. This can either make, or cost you a lot of money. Include the cost of loss, damage, or returns in the initial price so you don't have to hold up progress by dealing with it case by case.
Never, ever, ever, endorse, or warranty materials that you do not re-sell directly to your clients. It's not worth the risk of a "you told us to buy....but we don't like it!" problem later on.
2% Administrative Transaction Fees
The general administrative cost of managing financial transactions for your business.
Tip
While not all materials will include every cost, adding a standard percentage will cover costs when they arise, and increase your overall profit.
About Our Professional Grade Design Documents
The last time we checked, contractors weren't volunteer designers but, sometimes you may feel like you don't have a choice with these decisions in order to move your job along.
Not having the right information from the start can cost you a lot of time and money. As a contractor, you should know exactly what your client wants, and where it should go before starting a job. That way you can do what you do best, quickly execute the job. Using professional grade design documents will not only make it look great but also add profit to your bottom line.
Spec Binder's ready made design documents come complete with all the documents you need for you and your client to work together in creating a space they want, with the information you need. Check out how it works here.
