Purchasing Your Own Material

There is one reason why many people want to purchase their own material when having work done on their home, money.  The problem is that there are many reasons why purchasing your own material does not work out, and money could also be one of those reasons.

First we have to discuss what material mark up is.  A mark up on material is an increase in the price in order to cover expenses, overhead, and/or profit.  Not all companies mark material up, we choose not to.  For us, it’s simply easier not to mark the material up at all, we use the labor rate to cover all of our expenses.  Other companies choose to mark material up, and that is part of their pricing system.

First, we have to assume that the contractor in question is going to mark up material, and by purchasing the material yourself, you will save that mark up.  I’d like to clear the air here and make it known that a contractor who normally marks up material will not give up that markup, he will simply move it to the labor cost.  Let’s look at the math.

You want a job performed, the contractor gives you a total price of $3,200.  His labor is $2,000, his material is $1,000, and his material markup is $200.  Now you tell them that you will provide the material, so he takes off the $1,000, but he leaves that $200 markup.  You don’t know this because you only know the $3,200 price.  Even if the contractor is willing to breakdown his price (which most won’t) he will still hide that markup.  You see, that markup is part of his pricing system, he requires that money to run the company, so he is not willing to give it up.

But there is more.  You now have to pay the $2,200 plus the burden of buying material is on you.  You go do the work of purchasing the material and find that it is going to cost you $1,500.  The contractor’s material price of $1,000 is with his contractor discount, he is buying at wholesale prices and is able to sell it to you for less than you will pay retail, even with his markup added in

Here is an example in my own trade, electric.  A customer wants a kitchen upgrade and would like me to do the electrical work, but he insists on buying the GFCI receptacles.  He goes to Home Depot and pays $18 each for Leviton brand.  I personally do not like that brand, they have a high failure rate.  Instead I buy Pass and Seymour brand from my supply house for $10.  Since I don’t mark it up, the customer pays $10.  Even if I did mark material up, I would only charge $12, still much less than the $18 that the customer would have to pay.  By allowing me to provide the material, the customer saves money, gets a better product, and doesn’t even have to leave the house.

But wait, there is more!  When a customer provides his own material, the contractor doesn’t warranty that item.  So let’s say in 8 months that GFCI fails.  If I provided it, I will come back and replace it since I offer a 1 year warranty on material.  If the customer provides it, they now have to pay for a service call to come diagnose the problem and repair it as well as the cost of the new GFCI.  That alone will cost more than any of their perceived savings. 

Finally, there is the question of whether the customer knows exactly what material is required and if he could find it.  Contractors have better resources to find what they need and they also know exactly what they need.  Homeowners will often get the wrong material or not be able to find some of it.  This causes delays in the work and possible extra charges.  Most contractors will put stipulations into the contract stating that if the customer doesn’t provide the required material at the time of installation, the contractor could charge for the added time to go out and get what they need. 

In the end, the notion that buying your own material will save you money is often wrong and could lead to both added costs and aggravation. 

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