I agree that a business has to cover overheads, but many want to cover
the overheads twice over: once by marking up the materials, and again by
marking up the labor charge.

When we lived in Taiwan, I never paid labor charges to get my car fixed:
the markup on the parts covered the workers' wages. In NY I paid retail
price for the parts PLUS $90/hr. labor charge.

MB

Whether you vote Democrat or Republican today, the country will still be
run from boardrooms in the USA and elsewhere, not by your elected
representatives.


On 11/02/04 10:04 am Jeffrey J. Kosowsky put fingers to keyboard and
launched the following message into cyberspace:

Finally, from a "moral" viewpoint, I have always thought it to be
borderline sleazy that contractors make an additional *hidden* margin
by marking up the price of materials. I am happy to pay a fair and
competitive hourly labor rate and to pay a delivery charge on
materials, but I fail to see why a contractor should make an
additional hidden profit by marking up materials due to the old "cozy"
relationship between suppliers and contractors. I now use the Internet
all the time to challenge contractors on marked-up materials pricing
thereby avoiding being gouged and getting a better sense of my labor
vs. materials cost. In fact, this is no different from the uproar over
hospitals marking up the price of Tylenol (beyond the cost of goods
and administration) or government contractors marking up the cost of
toilet seats.

We don't mark up the cost of our materials. Not all contractors do.
But I understand the reasoning. Look, you will end up paying the
contractor you hire the same amount, regardless. Contractors have what
are known as fixed expenses. You know, things like licenses, liability
insurance, worker's compensation insurance, health insurance,
insurance on trucks, equipment expenses, and other overhead expenses.
These expenses must be met. Then there is labor that must be paid; yet
another expense that must be met. After all these items have been
satisfied then, and only then does the contractor pay himself. Would
it help you to feel better if the bill you received showed the price
paid by the contractor for materials as being the price paid by you
and the rest of what you seem to think of as an inflated price charged
to you as "profit?" (Although you don't know what the true profit is
since you don't know what that particular contractor's operational
overhead is.)


I fully understand that the business only works if the homeowner
covers the cost of licenses, liability, workers comp, health, etc.
I just think it is more straightforward if that is built into the cost
of labor rather than as a hidden materials markup. After all, we all
know that if I am paying $40/hour for an assistant, that assistant
is not taking home $40/hour. However, I would prefer the price of
materials to be equal to the actual cost plus a small markup for
reasonable pickup & delivery charges.