# Listing materials on estimate



## parks8998 (Jul 4, 2016)

Hey so quick background, I'm 26 and started my business 7 months ago. I do handyman work and slightly larger jobs, most jobs are $1000-4000 for materials and labor total. 

I'm still learning the ropes and I do not know everything but I am eager to learn anything and everything I can. I have been in the field for ten years and I did take some business classes in college (although most were aimed at much larger companies).

So my question is, on estimate do you list out materials and their price, and separate labor? Or one lump amount. I use quickbooks and currently I don't Mark up materials and I list individual prices. I read a few threads about marking up prices, but since I mainly shop at hd,lowes and a local lumber yard, I feel customers would see the markups too easily. 

I'm hesitant to list one lump sum because customers have said they liked how I broke down the estimate for them, and if I do one sum the estimate will basically have a few lines of detail. At the same time I would like to do a slight markup on material to cover unexpected minor costs and things like paper towels and when it comes time to replace saw blades. I do account for some of that stuff in labor costs but it's hard on smaller jobs. Any advice would be greatly appreciated


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## Stano (Jun 9, 2016)

I do a detailed explanation of the work and one lump sum price. I don't break it out. 


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## Stevarino (Sep 28, 2013)

I never break down materials costs. The only time I come close to this is by giving them allowances in the bid. Such as $5k for bathroom remodel materials and labor and in that I have an allowance of $750 for tile, $200 for light fixtures, $600 for vanity and counter, etc. 
I prefer not to even have to break things down this much but when I need to have the customer make a lot of selections it is the easiest way to avoid confusion or then picking items way out of budget. If they pick higher priced items they have to pay the difference. 

Oftentimes what I prefer to do is have them purchase items they pick out such as fixtures and faucets and vanities. I often even have people purchase their own tile unless they are using one of my suppliers. 


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## Defenestrate (Aug 13, 2015)

Sawblades (and other consumables) can either be attributed to one particular job or rolled into general overhead. 

But that isn't my main point. By being "transparent", you're allowing the customer to control the conversation. You open yourself up to all kinds of chiseling, which eats your profitability. They'll start asking why you buy 2x4s at a real lumberyard when place X sells them for less. They'll explain that "... they don't make $90 an hour for their labor, so why should you?" You'll graciously eat the cost of "a few screws", because it would be embarrassing to get caught charging them for a whole box.

Stop focusing on the components of the price and sell the service. One big list of items A, B, C, D with a big price at the bottom. Explain that you can't break discrete prices out because the tasks are interconnected. If they want to delete item B, then go back and recalculate with a new price. 

Customers that demand breakdowns are the ones you don't want to work for.


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## parks8998 (Jul 4, 2016)

I definitely see what you are saying. So far I had one terrible customer, but all others were great. So basically I just write out the labor (I give a brief description of what I'm doing without giving too much detail) and say that this includes all materials. Instead of listing materials individually. Alot of my competition in the area are much large companies with dozens of employees, so for the type of smaller "honey do list" type stuff I do, I generally fall way under my competitors price. And I still charge $50 a hour which I know can be higher but that is solid for my 7 month of business on my own


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## pcplumber (Oct 12, 2008)

parks8998 said:


> Hey so quick background, I'm 26 and started my business 7 months ago. I do handyman work and slightly larger jobs, most jobs are $1000-4000 for materials and labor total.
> 
> I'm still learning the ropes and I do not know everything but I am eager to learn anything and everything I can. I have been in the field for ten years and I did take some business classes in college (although most were aimed at much larger companies).
> 
> ...


I don't understand why so many contractors are afraid to show and compare actual prices.

Showing your prices on estimates depends on how you want to bid your jobs. When doing work for a flat-rate price you don't show the price you paid unless there is a specific reason i.e. when the customer gives you the inclination that they may want to remove or alter a big ticket item. Regardless, you have to make it clear that you don't put the price for items in a flat-rate contract because you have to charge for pickup, delivery, handling, theft, loss, damage, profit and overhead.

When you bid jobs by the hour you can make it clear that you either mark up items 10% to as much as you want for the same as above, or when you do T & M jobs you have to provide invoices for the materials you purchase. Therefore, you can submit copies of the actual costs, but put a clause in your contract that states that you charge no less than a 15% mark up on the entire contract total. We are currently doing a job where I am charging $75 per hour for each employee and $120 per hour for myself plus 20% of the total contract. That means I am really getting $90 per hour for general laborers, paying them $25 per hour and I am getting $144 per hour for myself. I submit supply invoices with the actual cost, but I make a 20% profit on every item including the concrete that was $15,000, concrete pumps that were about $3,000, etc. and the markup helps to cover the cost for supply house runs, book keeping, overhead, etc.

Don't be shy about making a profit on materials. I make it very clear to customers that I have to pay my employees by the hour to go to Home Depot and somebody (not my company) has to fit the bill.


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## parks8998 (Jul 4, 2016)

You are defiantly right, cause I spend a lot of time making trips for material. Usually it's on a weekend or after work too so I don't have to go in the morning. I live in NC and there is confusion on sales tax. Supposedly another contractor told me if I list materials out then I have to pay sales tax cause I am "selling" materials to them but if I do a lump sum then I am exempt from sales tax. I've spoken with the nc depart of revenue three times and can't get a straight answer. They recently passed a bill making service contracts, mechanics and other trades start paying sales tax on labor as well as materials. 

Back to the main topic, if I start doing lump amounts it will probably stop ppl from asking to delete things off an estimate after reviewing it. Example, last week I had two ppl ask me to delete certain items off the list probably cause I broke it down so much. Like they would say we accept your bid but we decided not to replace this door or do this drywall repair. The jobs were still worth it but it is annoying still.


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## RangoWA (Jun 25, 2014)

The downside to materials breakdown, apart from the time spent, is they can shop via a competitor's prices and ask why their xyz is cheaper than yours, without considering any factors like overhead, supplier discounts, quality, etc. It opens a whole can of worms. Whenever I've had a auto worked on I just got a lump sum for parts, it never bothered me. Also they may well want to supply their own materials if they think they can get them cheaper.


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## Leo G (May 12, 2005)

Give them as little information about the tiny stuff and do great detailed explanations of what you will do on the job.

Instead of Install cabinets for kitchen.

I will list the cabinets and sized plus what shelving, pullouts or accessories will be in that cabinet.

It'll make them much more comfortable knowing what they are getting then if you do a basic covers all line.

I rarely if ever will break my prices down to components. All that does is give them ammo to rip you apart and cherry pick aspects of the job. If you list them out like that it'll put it in their mind they are separate items and they can ala cart order just some of the stuff.

I've had it where I'm doing more then one room of cabinets and state on the quote that the price is only for having both rooms done at the same time. You can't have room "A" done now and have me back to do room "B" a couple of months later and get the package price.

I don't blame a client for looking ways to save money. Hell, we all do that most of the time. But I also need to run the business and make money. It rare that a job will go just as planned and you make what you thought. It's more likely that you will have something that isn't smooth and waste time. So it's always something that you need to look out for and you will learn after time what those things are specifically in your line of work.


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## pcplumber (Oct 12, 2008)

Leo G said:


> Give them as little information about the tiny stuff and do great detailed explanations of what you will do on the job.
> 
> Instead of Install cabinets for kitchen.
> 
> ...


I've had cabinets custom built for more than 300 kitchens by various cabinet contractors and it always makes good business sense to ask the price for cheap hinges vs. quality, real wood shelves and backs vs. particle board, or photo finish wood and custom vs. pre-built. As a customer, it is also critical to ask for separate prices for different models and different quality appliances. The end result is; as a cabinet contractor you have to divulge your price for each item and then the customer has the ability to compare prices with other contractors and stores. XYZ contractor wanted $300 more for the best hinges. If I asked you how much the cheap hinges cost and you told me it was none of my business then our conversation is over. 

I could care less if you pay $1 for a hinge, or $50, but if you told you that you are refusing to tell me then we are finished because that comment is rude. A good salesman could say they don't know the exact price and the cost is $2 to $5 and that is better than refusing to answer.

Customer: "I decided I am too old to go shopping and too dumb to install it and I want you to add the refrigerator to your bid. How much will the contract be if you add a 36-inch white Frigidaire refrigerator Model FX-1314?"

Contractor: "With pickup, delivery, uncrating, setup, profit and labor I can put it in the contractor for $2800."

"Take it or leave it!" Who cares??? "If you can't make a profit it is not worth doing."

The worse part about this thread is that the first priority for contractors is to build, deliver and install the services and products customers want. Most customers sort of already know what they want long before the contractor arrives and the customers have already Googled their items and the prices far in advance. Now, along comes the macho contractor with all his secretive information that he would never divulge to his customers who probably knew long before meeting the contractor where they could purchase the items themselves and beat all the contractor's purchase prices.

Contractors raise the hair on the back of my neck when they act like they are on a high pedestal and hesitate to talk to me like I am a human being just because I asked a good and innocent question and they tell me they can't tell me the answer for whatever reason. 

I say, "just answer the questions the best you can and if you can't get what you want out of the deal then shake hands, walk away and scratch your butt." You get more money, more business and more referrals by being honest and upfront with customers than you ever will when you tell people that you refuse to answer any question. Maybe, there are many questions you can't answer, but you are not the last game in town and customers like to feel like they are doing good homework when they ask questions. 

"Maam, you are 100% correct. The refrigerator is $1497 at Home Depot and if you want me to pick it up, deliver it, uncrate it, set it up, install the icemaker line and dispose of your old refrigerator I will give you the refrigerator for $2400."


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## builditguy (Nov 10, 2013)

You're getting alot of good advice here. It doesn't matter that you are a honey do contractor. That's where I started.

Mark up your materials. When you supply the materials you are also standing behind their quality. You are giving a warranty on the materials. Even if you don't think you are.

Now, for your evening and weekend trips for materials. Are you figuring that into the job? Are you charging $50 per hour on the job and then investing another 20 hours off the job, that you aren't charging for? 
So now your $50 rate is more like $25? Then overheard, then taxes. Now you just made $10 to $12 per hour. Most likely less.

I'm not saying your price is too cheap. I'm asking, are you spending 40 hours working on a job, that only gets billed 20 hours?

Stick with this site. You will only get better.


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## Leo G (May 12, 2005)

pcplumber said:


> I've had cabinets custom built for more than 300 kitchens by various cabinet contractors and it always makes good business sense to ask the price for cheap hinges vs. quality, real wood shelves and backs vs. particle board, or photo finish wood and custom vs. pre-built. As a customer, it is also critical to ask for separate prices for different models and different quality appliances. The end result is; as a cabinet contractor you have to divulge your price for each item and then the customer has the ability to compare prices with other contractors and stores. XYZ contractor wanted $300 more for the best hinges. If I asked you how much the cheap hinges cost and you told me it was none of my business then our conversation is over.
> 
> I could care less if you pay $1 for a hinge, or $50, but if you told you that you are refusing to tell me then we are finished because that comment is rude. A good salesman could say they don't know the exact price and the cost is $2 to $5 and that is better than refusing to answer.
> 
> ...


We decide what they are looking for and then price it out. My prices between hinges isn't really going to matter in the overall price of a kitchen. Are you telling me that if the kitchen was 20,000 for a kitchen with the premium hinges and 19945 with the cheap hinges that gonna be a sale for me? And then the BS of these cheap hinges over the next few years?

The only thing that really makes a difference in the price of the kitchen with me is materials. If you want Cherry or Maple it's not going to matter in the price. If you go from plywood boxes to melamine boxes that'll make a difference as the materials are $25 vs $75 a sheet and the avg kitchen run 25 sheets.

I usually don't need to worry about that because my customers come for custom and not cheap. I've made 2 melamine kitchens in my career. One had a Cherry faux grain and the other was white. Changing up from white to a photo I usually don't upcharge because it's $10/sheet and at 25 sheets, $250 means little to me. I'd rather get the sale and the client be happy then quibble about $250 on a $12K+ kitchen. Most of the cost comes from labor and materials aren't that big of a deal in the cost of a kitchen. The things that make a difference are the details. Plinth blocks, Fluted pilasters, Corbels and the related time to install and finish these components is likely a lot more then the client expects. A corbel that cost $80 is going to add $250 to the cost easily. The time to sand, install and finish this component is usually much greater proportionally then a flat surface. Especially in the finish department. And then there are usually multiples of these components.

You do your business they way you feel and I'll do it the way I feel. Since 95% of my work is referral I'm usually bidding against myself. If I lose a job because of price I will encourage the client to go with the lower cost job. But they usually say they want me. Sometimes they want me to match the lower price, and I won't because my price is my price.


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## RH*carpentry (Jul 29, 2016)

I will bet that many states have laws regarding this issue. I live in Arizona and under the contractor licensing laws this issue is addressed. First understand that contractors and subcontractors are agents of the property owner. This is stated clearly in our lien laws and the contractor licensing laws state that no contractor or subcontractor shall act as an agent without first having a license, unless there is a specific exemption.

As an agent a contractor or subcontractor has a duty to divulge the actual true cost of labor and materials. Arizona's licensing statutes have a process called "certification and approval". Basically this means that contractors must provide bills or invoices from mechanics and materialmen which show the true cost of the labor or materials. The property owner has fourteen days to contest any bill or invoice for specific reasons stated in the statute. If a bill or invoice is not challenged within the fourteen day period, the labor or material bill is considered "certified and approved". The contractor or subcontractor is then reimbursed this precise amount. 

By now you are asking yourselves how the contractor or subcontractor makes any money. The answer is easy. His contract price which belongs to him and him alone. Suppose I ask someone to go to the grocery store for me to obtain a list of fifty items. We agree that I will pay him $100 for doing this. We agree that he will pay for the items as my agent and that he will be reimbursed for his expenditure. By bringing me the receipt I can see what the cost of the grocery items were so that I can "certify and approve" the actual expenditure. He then gets reimbursed for the grocery items and gets his $100 on top of that. So his profit is $100.


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## Leo G (May 12, 2005)

Ya. I don't like it. Sounds like the owner can testify against just about anything for any reason within that 14 day period. If the client is pissy and for whatever reason during the middle of the job you guys rub the wrong way he can make your life a living hell just because he feels like it.

You can have it.


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## tedanderson (May 19, 2010)

Defenestrate said:


> Explain that you can't break discrete prices out because the tasks are interconnected. If they want to delete item B, then go back and recalculate with a new price.


That is by far the best defense/explanation I've heard so far when it comes to not disclosing material costs.:thumbsup:

Your pricing is just like the recipe for Coca-Cola. The FDA requires them to list every ingredient on the bottle but they don't have to tell you how much of each ingredient is in it or the process of making the syrup. 

Also I've told my customers that I don't do material price breakdowns because the price of the materials are always changing. My pricing keeps you from being affected by the price changes.


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## pcplumber (Oct 12, 2008)

Leo G said:


> We decide what they are looking for and then price it out. My prices between hinges isn't really going to matter in the overall price of a kitchen. Are you telling me that if the kitchen was 20,000 for a kitchen with the premium hinges and 19945 with the cheap hinges that gonna be a sale for me? And then the BS of these cheap hinges over the next few years?
> 
> The only thing that really makes a difference in the price of the kitchen with me is materials. If you want Cherry or Maple it's not going to matter in the price. If you go from plywood boxes to melamine boxes that'll make a difference as the materials are $25 vs $75 a sheet and the avg kitchen run 25 sheets.
> 
> ...


I think this thread is about whether or nor you list materials and the prices on a bid or contract. 

I believe that there is a significant difference in the cost for the best hardware for cabinets. I can get door hinges for as little as $0.79 and the best self-closing hinges that homeowners can take apart by pressing a clip cost about $7 each. when purchasing 200 hinges every month the cost could be $158 for the cheap hinges, or $1400 for the best hinges.

So, you quote me a price of $35,000 to build new cabinets. I never got another bid and I don't know if your price is spot-on, high, or low, but you did tell me that you are using the best hinges that I like. You was smart enough to qualify me on the phone when you asked me what my budget was and I said it was $30,000. You was a happy camper until you arrived at my home with your big hairy chest bulging out and up until you quoted me a price of $35,000. Now, as the customer, you put me on a hot seat because you made me think my $30,000 budget was adequate when you silently agreed on the phone that my $30,00 budget was suitable. 

I told you my budget was $30,000 and I don't want to spend $35,000. So, I ask you to price-out the cheaper hardware and I want to know if I can get the budget down to the $30,000 that we talked about on the phone. Is it a sin to ask a contractor to list items with prices so customers can make informed decisions based on their personal desires and needs? Or, should a contractor just be cocky, arrogant and tell his customers that he will not and cannot list items with prices. 

"Just pay the price I bid and you had better not ask me to list the items nor their prices."

"In fact, I come so highly recommended you had better be very careful about the questions you ask me."

"Everyone in town knows that I am the best and the only other thing you need is to know the style you want and my price."

"If you question me about my prices I don't want your business and I don't need your business because I am a highly-recommended contractor."

"Me Tarzan! You Jane!"


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## Leo G (May 12, 2005)

I don't know where you buy your hinges but mine are about $3.88 and $.65 for the plate for the best self close. And as for the cheap hinges I don't ever use them. All I use right now are Blum hinges and I haven't used a face frame style hinge in years. Mostly I use those when replacing doors on a kitchen. I use one self close and 1 soft close on each door.

I don't think I've ever bought 200 hinges for a kitchen. That's nearly a 100 doors. Most of my kitchens are 30 doors +/- so I'm getting 65 hinges or so. 40" door gets 2 hinges, 42 gets 3. So most doors only need 2 hinges.


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## RangoWA (Jun 25, 2014)

RH*carpentry said:


> I will bet that many states have laws regarding this issue. I live in Arizona and under the contractor licensing laws this issue is addressed. First understand that contractors and subcontractors are agents of the property owner. This is stated clearly in our lien laws and the contractor licensing laws state that no contractor or subcontractor shall act as an agent without first having a license, unless there is a specific exemption.
> 
> As an agent a contractor or subcontractor has a duty to divulge the actual true cost of labor and materials. Arizona's licensing statutes have a process called "certification and approval". Basically this means that contractors must provide bills or invoices from mechanics and materialmen which show the true cost of the labor or materials. The property owner has fourteen days to contest any bill or invoice for specific reasons stated in the statute. If a bill or invoice is not challenged within the fourteen day period, the labor or material bill is considered "certified and approved". The contractor or subcontractor is then reimbursed this precise amount.
> 
> By now you are asking yourselves how the contractor or subcontractor makes any money. The answer is easy. His contract price which belongs to him and him alone. Suppose I ask someone to go to the grocery store for me to obtain a list of fifty items. We agree that I will pay him $100 for doing this. We agree that he will pay for the items as my agent and that he will be reimbursed for his expenditure. By bringing me the receipt I can see what the cost of the grocery items were so that I can "certify and approve" the actual expenditure. He then gets reimbursed for the grocery items and gets his $100 on top of that. So his profit is $100.


So you can go to Home Depot and find out what they paid?


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## RH*carpentry (Jul 29, 2016)

Leo G

I did not write the Arizona law so it makes no difference what I or any other Arizona citizen thinks. As I stated the statute lists certain reasons the property owner can object to a bill or invoice. Suppose a remodeling project calls for ten new windows. An invoice for twenty windows is given. Should the property owner not be able to object to such a bill? Or suppose a one story residence is constructed. An invoice for stair materials and another for stair labor is given, even though there are no stairs in the house. Should the property owner not be able to object to these bills? The reasons in the statute are not predicated on whims of the property owner. The reasons the property owner can object are valid reasons and the property owner must give them in writing. Under your logic, if the property owner is charged for twenty windows when only ten go into the project, then the property owner is being unfair on a whim.


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## EricBrancard (Jun 8, 2012)

RH*carpentry said:


> Leo G
> 
> I did not write the Arizona law so it makes no difference what I or any other Arizona citizen thinks. As I stated the statute lists certain reasons the property owner can object to a bill or invoice. Suppose a remodeling project calls for ten new windows. An invoice for twenty windows is given. Should the property owner not be able to object to such a bill? Or suppose a one story residence is constructed. An invoice for stair materials and another for stair labor is given, even though there are no stairs in the house. Should the property owner not be able to object to these bills? The reasons in the statute are not predicated on whims of the property owner. The reasons the property owner can object are valid reasons and the property owner must give them in writing. Under your logic, if the property owner is charged for twenty windows when only ten go into the project, then the property owner is being unfair on a whim.


I don't recall anything in this discussion about charging for work that was not performed. That is entirely different. Now if someone agrees to have 10 Windows installed by contractor A for $x, and contractor B charges the same $x for 20 Windows, does that mean that contractor A should only get paid 1/2 his original bid? No, so on what basis does this law stand?


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