Contractor Profit

[secondcurve]

What is a reasonable markup on material and labor for a contractor on a home renovation project? Also, do folks see any signs of slowdown in the Lakes Region for construction/renovation demand?

Thanks

[TomC]

On a recent project, my contractor charged 15%...

[ishoot308]

Originally Posted by secondcurve

What is a reasonable markup on material and labor for a contractor on a home renovation project? Also, do folks see any signs of slowdown in the Lakes Region for construction/renovation demand?

Thanks

15% is the going rate.

Dan

[secondcurve]

Is it typically 15% for labor and material plus 15% for
overhead? I’m trying to back into a quote and I want to understand what is standard/reasonable.

Thanks again

[ishoot308]

Originally Posted by secondcurve

Is it typically 15% for labor and material plus 15% for
overhead? I’m trying to back into a quote and I want to understand what is standard/reasonable.

Thanks again

No, it usually labor + materials + 15%.

Dan

[Biggd]

In the real world, a contractor would mark up the job 100%. Whatever your materials cost, double it. Obviously, he's not making 100% mark up with labor, insurance costs, and other expenses.
With the market today and all the work available to them I'm sure it's more now.
So, bottom line I would expect them to come away with at least 30% if not more.
I think in most service related businesses, if the owner isn't making 30% for himself, he's better off just getting a job!
Most successful business owners work 60 plus hours a week.

[SAB1]

I would figure 20%. 15% was good a decade ago but things eeke up.

[John Mercier]

I haven't seen a slow down.
Even the less well known contractors seem to be booked pretty far out.

The difference in prices of materials isn't a set percentage; retail to contractor pricing varies from product to product; with some items having no difference.

[Descant]

I have to chuckle a little about "standard" mark up for most of you. Don't forget to add time to load and unload the barge by hand, transit time and transportation/time for the crew. None of this "includes free delivery to your job site." LOL

[Biggd]

Originally Posted by Descant

I have to chuckle a little about "standard" mark up for most of you. Don't forget to add time to load and unload the barge by hand, transit time and transportation/time for the crew. None of this "includes free delivery to your job site." LOL

Oh, I didn't know we were talking Island construction? That's a whole different ball game!

[John Mercier]

Even without being on an island... there is a ton of work to be done.

Some outfits have huge teams behind the scenes that acquire quotes, arrange purchases, and set the schedules for deliveries.

[secondcurve]

Originally Posted by Biggd

Oh, I didn't know we were talking Island construction? That's a whole different ball game!

I wasn’t talking island construction. I do understand the point though that there is travel, set-up time, etc.

Thanks

[secondcurve]

Originally Posted by SAB1

I would figure 20%. 15% was good a decade ago but things eeke up.

Does the average contractor break out his proposal by labor, materials, mark up, etc.?

[secondcurve]

Originally Posted by Biggd

In the real world, a contractor would mark up the job 100%. Whatever your materials cost, double it. Obviously, he's not making 100% mark up with labor, insurance costs, and other expenses.
With the market today and all the work available to them I'm sure it's more now.
So, bottom line I would expect them to come away with at least 30% if not more.
I think in most service related businesses, if the owner isn't making 30% for himself, he's better off just getting a job!
Most successful business owners work 60 plus hours a week.

30% to the bottom line is not seen in many businesses. That is a huge profit. Think about it, a $3,000,000 revenue company’s owner would make $900,000! That doesn’t happen often.

[SAMIAM]

Originally Posted by secondcurve

30% to the bottom line is not seen in many businesses. That is a huge profit. Think about it, a $3,000,000 revenue company’s owner would make $900,000! That doesn’t happen often.

30% is way over the top…..most business are lucky to get 15%….20% is a home run in the restaurant business

[Biggd]

Originally Posted by SAMIAM

30% is way over the top…..most business are lucky to get 15%….20% is a home run in the restaurant business

I guess that's why a lot of restaurants don't make it, slim margins.
I had an Auto repair business, if I didn't make 30% I would have gone to work for someone else.
I worked 60 to 80 hours a week, some weeks I made over $100 an hour and others I made $10.
Some weeks, everything I touched turn to gold. Then there are other weeks, everything I touched turned to *****.

[John Mercier]

Originally Posted by secondcurve

Does the average contractor break out his proposal by labor, materials, mark up, etc.?

I've see it broken out by materials and labor.
I think the reason being that a homeowner can pretty easily get an idea of what the material cost.

For quick quoting, I use the simple method of twice the cost of material.
It doesn't always work out that way. Because of the variable with cost.
For example a 36x80 storm door takes about the same amount of effort and extraneous materials (caulking, etc)... but can have a pretty dramatic pricing difference.
Same goes for other items you purchase.

Experience contractors will adjust, because experience tells them what completion with quality will really take.

[Biggd]

Originally Posted by secondcurve

30% to the bottom line is not seen in many businesses. That is a huge profit. Think about it, a $3,000,000 revenue company’s owner would make $900,000! That doesn’t happen often.

I guess that depends if you're just a GC hiring subcontractors to do everything or a full construction company that has employees and equipment to do most of the work.
I could see just a GC subbing out everything, making 10 to 15%.

[sky's]

Originally Posted by secondcurve

Does the average contractor break out his proposal by labor, materials, mark up, etc.?

first of all it's not "a mark up" its wholesale to retail. were not reinventing the wheel here. its the responsibility of the homeowner to hire someone who he or she feels comfortable with and has the most knowledge for there project. Cost; WITHIN REASON takes a back seat to experience and knowledge. these post always gets me, you're buying a service not a new television. talk to a few contractors if they cant spend some time with you and answers your questions or concerns move on to someone whom can. wish you the best of luck.

[Descant]

I hope things will settle down in 2025. I get the impression GC's are quoting crazy because they have no idea what their costs will be in the next two quarters, never mind next spring. Obviously there are overquotes because they don't need the work in their current backlog. And there seems to be a mismatch between contractors who have long backlogs and lack of inventory. Shouldn't this draw more builders/developers into the business? I sit on a couple of scholarship boards. We can't get people to apply for trade scholarships. Huge missed opportunities.

[John Mercier]

I haven't seen a lot of crazy quotes.
I have seen some that are far out on the roster only willing to take a deposit to enter a customer into the roster.

I don't expect that material prices will go that crazy... they've been pretty stable.

The Lakes Region being a retirement location tends to have negative demographics that increases customer demand and decreases available workforce.

We also have a fairly large amount of customer inefficiency that builds in cost and time to projects.

[secondcurve]

Originally Posted by sky's

first of all it's not "a mark up" its wholesale to retail. were not reinventing the wheel here. its the responsibility of the homeowner to hire someone who he or she feels comfortable with and has the most knowledge for there project. Cost; WITHIN REASON takes a back seat to experience and knowledge. these post always gets me, you're buying a service not a new television. talk to a few contractors if they cant spend some time with you and answers your questions or concerns move on to someone whom can. wish you the best of luck.

If you don’t have any productive input to the question asked I’d suggest you refrain from comment.

[Biggd]

Originally Posted by secondcurve

If you don’t have any productive input to the question asked I’d suggest you refrain from comment.

A little harsh, don't you think?
From what I've read over the years here, Sky is a respected member of the forum and usually gives good info.
It's best to just take it or leave it.

[The Real BigGuy]

A “fair price” is not a penny more than you are willing to pay. A contractor’s mark up or margin is actually none of your business


Sent from my iPhone using Winnipesaukee Forum mobile app

[Biggd]

Originally Posted by The Real BigGuy

A “fair price” is not a penny more than you are willing to pay. A contractor’s mark up or margin is actually none of your business


Sent from my iPhone using Winnipesaukee Forum mobile app

Just like bad contractors, there are bad customers.

[NH.Solar]

I'm holding off on building a new home as well and am hoping that the sudden downward adjustment in the Japanese Nikkei exchange may finally trigger a retrurn to normalcy. $400+/square for a simple home design is just nuts!

[ishoot308]

Originally Posted by ishoot308

No, it usually labor + materials + 15%.

Dan

Secondcurve,

One thing I did forget to mention is depending on the size of the project you are doing they could assign a project manager to coordinate subs, materials, billing and any change orders you require. This is not a 40 hour a week expense but you will get a modest charge for their time. On my project it was a welcomed expense as coordination was needed to keep my project on schedule.

Dan

[ishoot308]

Secondcurve, One thing I did forget to mention is depending on the size of the project you are doing they could assign a project manager to coordinate subs, materials, billing and any change orders you require. This is not a 40 hour a week expense but you will get a modest charge for their time. On my project it was a welcomed expense as coordination was needed to keep my project on schedule.

Dan

[secondcurve]

Originally Posted by Biggd

Just like bad contractors, there are bad customers.

So you don’t think it is appropriate to ask for the number of hours needed to complete a job or the cost of materials?

Thanks

[John Mercier]

Originally Posted by NH.Solar

I'm holding off on building a new home as well and am hoping that the sudden downward adjustment in the Japanese Nikkei exchange may finally trigger a retrurn to normalcy. $400+/square for a simple home design is just nuts!

That will effect the higher end... those are in the $1000+ per square foot range.

[Biggd]

Originally Posted by secondcurve

So you don’t think it is appropriate to ask for the number of hours needed to complete a job or the cost of materials?

Thanks

I don't think your response to Sky was appropriate.
He was giving advice, if you didn't like it then just ignore it!
You have the right to ignore me also.

[Susie Cougar]

Originally Posted by Biggd

I don't think your response to Sky was appropriate.
He was giving advice, if you didn't like it then just ignore it!
You also have the right to ignore me also.

This is to second curve.
Your attitude is way over the top. I don’t know what is bothering you. I think sky’s advice was right on and you had no right to criticize him for trying to help. if you don’t like the answers you’re getting, you shouldn’t have asked the original question.

By the way, my brother-in-law has been building homes in Moultonborough for decades.

[John Mercier]

Originally Posted by secondcurve

So you don’t think it is appropriate to ask for the number of hours needed to complete a job or the cost of materials?

Thanks

The contractor should be able to give you an idea what the estimated number of weeks for completion will be. It is not a hard number but their estimate based on past experience.

Cost of materials can be found by seeking retail numbers.

[swnoel]

Originally Posted by secondcurve

What is a reasonable markup on material and labor for a contractor on a home renovation project? Also, do folks see any signs of slowdown in the Lakes Region for construction/renovation demand?

Thanks

Material and labor are 2 different things. I would also guess that materials are marked up dependant of cost. Labor is a computation of total cost to remain in business.

[SAMIAM]

25 Years ago we hired Brian Allen (with Cerutti Builders) to do a total remodel on our lake house. It was pretty complicated because we reversed the kitchen and sleeping areas, vaulted ceilings, all new floors, heating and plumbing systems etc.
But this was back in the good ol’ days when if you knew and trusted someone you could takes them at their word
We did the job without a contract…….start the job and let us know when you need a check. It worked out great and everyone was happy
Who would dare do that today?