Expert: David Coil/C. R. Construction - 2/13/2008

Question
I david, I am a contractor in Vancouver Canada and have a problem with a customer. He is complaining about my charge out rate on my employees and my markup on my material. is their a rule of thumb for a markup on material and labour that I should adhere to? (should I be contacting the laocal builders association which I don't belong to as of yet because of the fee's)I want to be fair and also make a profit at the same time. I mark up my material at 22% not including tax and markup my employees anywhere from 45% to 100% but I believe I am marking myself out of the market. I also charge a 15% contractors fee on top of the total Subtotal of the project. Am I totaly out of line, because if I am I dont know how I will be able to survive with less, unless I add a few more crews to my company. As of now I only have one construction crew doing renovations on older character and Heritage homes in the Vancouver area.

Your help is appreciated.

Best,

Ken Powers

Powers Construction & Restoration

Answer
We are going into a world wide recession.  It is coming.  If you are buying wholesale, you can markup 50%   if retail...10%   You are entitled to markup your profit to 15%.  Your customers have th right to shop around.  If you get too much work..you are too cheap.  If you loose most of your bids...too high.  I stay well under my competetors...to say busy.  I dont have an overhead...just me and my truck.  There is ALOT of windshield time that is hard to collect for....but I give the customer the options to supply all materials....that costs them more.    I sit and wait on them...
Dont let anyone tell you how to run  your business...trial and error...stay busy.