Customer wants to buy material

jonny88

Hi.A customer asked for a new boiler comparable with one of the leading mod/cons on the market.We gave him a price and he thought it was to high.He says he knows someone who can get materials at cost.He asked for a detailed list and he will get material.Any advice on how to handle this.

Tinman

No advice, just my experience. I've been asked that question quite a bit. In the past, I may have gone along with it a couple times but no more. Too many grey areas and too many possibilities for issues no matter how well its been spelled out in the contract.

What happens if the customer supplied boiler has a part failure within the manufacturer's warranty? Who pays for the diagnosis? Who pays to run for the part? Who pays for the labor to replace the part? I know my answer but the customer won't like my answer even though they agreed to the arrangement beforehand.

Tinman

Invariably, the ones who always want to buy things themselves are the most wealthy.

clammy

For family and real friends otherwise be prepared to deal with the nickel and diming and using your stuff here and there for free .Let them shop about till they find some one to do it for next to nothing which is what you ll be finding out by the time your done .let them go kick some one elses tires and waste there time not yours .I have been through this scene a few times now no more and it always seems those with the most have the most for a reason usually cause they beat some one out of it and i doubt you want to be the one .Unless your getting cash and alot of it up front before completion i de toss ,em back to the sea .Peace and good luck clammy

Harvey Ramer

Just don't do it. That's my advice.

jonny88

Bottom line is I feel like the customer wants to know the profit on job.It is a job I don't want to loose but all the sentiments are leading that way.Thanks guys.

FranklinD

Repairing vehicles out of my shop at home, I run into this literally all the time. Everyone knows someone that can get cheap parts. I only charge 15% over my cost on parts (instead of the standard 10% over list that most shops do here). But yes, especially the folks with the $55,000 SUV will go out of their way to not pay that 15%. Anyway...

Nope, I will not use parts the customer provides. I used to...but warranty issues arose and I gave up on it. Too much baloney. If they want any help from me on warrantying a part of my labor, then everything comes through me. Only then can I control the quality of the components I use.

Making exceptions for family is even worse. In fact, unless it's my mother or my sister, I tell them that I'm just too dang busy lately. Sounds kind of mean, but I've lived through that awkwardness a few times, and believe me, I'm doing everyone involved a large favor.

Tinman

My answer to that question is that I shoot for a 20% margin on every job. If I don't shoot for that I may as well go work for someone else.

clammy

as soon as some one wants to know your what your profit is ,is only a sign that your services are not seen as anything special and is run of the mill which is not the issue .I always steer away from anyone wanting to know how much your gonna make it s none of there bussiness maybe ask them how much they make on some one else back lol To put a better perspective on it what they driving peace and good luck clammy

Paul Pollets

In this world where everything gets com modified, the customer wants it "cheaper". I've dealt with this and made it work. First, I told the owner that if the boiler were purchased over the internet, Neither I or the manufacturer would honor the warranty. Nor would I install it. I told him I'd provide a list of materials he could purchase and would add 20% to the cost on my billing. If any of those materials were faulty, there would be a charge for replacement. He understood that my costs included a profit on materials, labor and overhead. Without the profit, it just doesn't work. He agreed to pay the costs and then went for a major change order at the end of the project. BTW, he was a VP at a major software company.

ChrisJ

I'm a homeowner, not a contractor nor do I run a business.

But, I wouldn't want to deal with the person. If I hired someone to install a boiler I'd expect him to use the materials he wanted and get them from his supplier whom he deals with constantly and can exchange things if there is a problem. Makes sense, doesn't it?

Not only that, but it's really not my business what he pays for the materials. It's a package deal, it costs X for the job, that's it.

A customer buying materials so a guy can come and install them is asinine.

Bottom line, you're going to end up with a problem with something. Something will be damaged, or, not the one you asked for and he'll tell you to use it anyway and then when it fails he'll blame you.

jonny88

@clammy in the driveway Bmw ,Audi,hummer,Ford 250 I think.Whole house generator is going in along with swimming pool.

Snowmelt

tell him to give you the credit card he buys all the material and you charge for the job.

SWEI

Paul Pollets said:

I've dealt with this and made it work.

So have I, though it really depends on the particular customer. After 30 years of interacting with a customers having quite a range of financial situations, I've gotten reasonably good at figuring out who's likely to be a problem.

More commonly, we split work -- allowing the customer to handle grunt work using family members, neighbors, etc. I'm not really looking to expand the amount of demo, cleaning, trenching or hauling we take on.

Bob Bona_4

I'd say no thanks. And he wants you to spend time on an engineered material list so HE can save money.

Let me go to McDonald's and ask for the list of Big Mac condiments I can bring in along with a beef patty, so all they have do is cook it.

Aaron_in_Maine

I have done it twice both times in came back to bite me. Now I tell people I only install what I sell. Unless it is a decorative fireplace or a cook stove.
I just had this same situation come up a couple weeks ago. Customer had another contractor put in a boiler and had nothing but problems for a year and a half. Calls the wholesaler and asks if they can recommend a new contractor to service it they gave him my name because I have put in quite a few of that boiler with no issues. I go over service the boiler and all is well for the whole winter. This spring he wants to put a new boiler in another building and asks me to do it. Asks if I can do it if he buys the materials I say no way. He then takes my bid to replace it after pondering it for a while.
Bottom line if you sell the installer instead of the equipment you won't have to worry.

SWEI

Aaron_in_Maine said:

Bottom line if you sell the installer instead of the equipment you won't have to worry.

That is indeed the key -- and a hidden upside of the execrable overall state of our industry. If you're good, you get to cherry-pick the customer base.

Paul48

In this day and age, why are contractors still insistant on taking the markup on parts? Times have changed, by all means, earn what you are worth, but telling someone he should pay 15 or 20% more than what they could purchase the item for, leaves a bad taste in anyones mouth. Raise your prices accordingly, and stop with that crap.

Tinman

@Paul48
Manufacturer sells it to the supply house at a profit.
Supply house sells it to the contractor at a profit.
Contractor buys it, stocks it in their shop, and then on their trucks and then makes no profit?

Paul48

Stephen.....You stock the boilers and components of every job? I can understand a service call, where you replace a circulator, but that's not what we're talking about.

Bob Bona_4

Paul, can we assume you work for someone?

Tinman

I'm not in total disagreement with you. I believe I learned the following from an Ellen Rohr column or book - try reducing the markup on parts and charge more in labor. That is what I do on installation equipment and material but I don't eliminate the markup altogether. There are still associated costs of material handling that need to be covered.

ChrisJ

As far as I knew, contractors go and buy parts at a discounted price and then charge the customer retail on them.

What's wrong with that?

Besides, their time is worth money and it takes time to buy things as well.

Paul48

Yes Bob.......I work for someone. ChrisJ , In this day and age, I'm saying include that in your hourly rate. It leaves a bad taste on folks mouth, to pay $2600 for something they can buy themselves for $2100. It's a throwback to a time, when no one knew the prices of things.

Paul48

Bob....I have a wife

ChrisJ

Paul48 said:

Bob....I have a wife

Please, leave the complaining at the door.

Tom_133

For the last year or so I have been giving a job total at the bottom of my estimates and don't break down the difference between labor and parts. I explain the job and all the new parts but won't itemize. It seems 50% of those I did this for in the past always found it tax free and cheaper on the internet. I'm all for people saving money but I still think the state needs their cut and Uncle Sam gets his, in the same way that they can trust me to do a quality job and not steal from them, I want to be above board in all my dealings. People are funny.

jonny88

Paul I completely disagree with you.First of I make my material list.I then go to supply house to pick up material,this all takes time.Ayn component I put in I am responsible for.All material doesn't magically appear at the customers house.I never said I was marking up my material cost to customer and I forgot to mention he also wanted a break down on labor aswell.I am walking away from this job.I don't go to his office and ask for a breakdown on lawyer fees.We have insurance,workmans comp,truck maintenance etc.
Stephen I agree with you 100% on this.

Paul48

jonny88............Notice, I never said make less on a job.

jonny88

Thats fine Paul but what happens when customer buys material.If the guy behind the counter gives him the wrong fitting or circ and I come to the job to do install who's responsibility is it to go and return the part.Do I sit there and charge him for doing nothing as I am waiting for material or charge him to go get material,either way you come out leaving a bad taste in the customers mouth.I don't believe I am required to give an itemized breakdown on proposal including labor charges etc.

Paul48

If you're selling parts at cost, he knows what your labor costs are, and if he doesn't like that....see ya. And, no, he doesn't buy the parts. Your labor costs include picking up parts. You make your money on your labor, and if not...on to the next. Unlike 30 years ago, you can't hide a parts markup, So don't! It's a practice that has gone by the way of the dinosaurs.

Jamie Hall

A comment from the customer's point of view? Although, perhaps, a rather odd customer (just ask Charles!). If I have a job to be done which I cannot do myself, or which I prefer to contract to some one, I try to find the best contractor I can for the job (and yes, I've made mistakes... but they don't get to come back). Then I describe the job and make sure that the contractor and I agree on what the objective is (not the details; if I hire and expert, I usually assume that he knows more than I do or I wouldn't be hiring him (or her)) and are really clear. Then we agree on a price and I tell him or her to get on with it (and usually give a deposit -- say 10% or so -- or on some occasions the deposit will cover the materials cost as the contractor presents it to me).

I assume that he or she is getting at least a small markup on the materials. As several have said, going and getting them is a pain and takes time. But I don't ask. The price agreed is for the finished job. Who am I to pick it apart?

I might add, however, that I also operate on the principle of "fool me once, shame on you. Fool me twice, shame on me".

I might also add that if my contractor then asks me to go and get some of the materials, he or she having ordered them, I usually don't have a problem with that.

BobC

@""Jamie Hall" I agree completely, as I get older there are some things I just can't do myself anymore. If I hire someone I expect him to by material that he is familiar with, that might cost a bit more but is usually offset by reduced installation times.

I expect they will provide all the parts and the labor to complete the job. Once we agree on a price, I could care less how much the parts markup might be. I trust the contractor will do what he has to so his costs are covered.

Bob

Ironman

Usually, as others have said, walking away from that type of customer is prudent.
Occasionally, I get one that wants to buy the equipment online. In that case, all I do is deduct my cost for it. I still include my markup for it and I tell them there will be no warranty by me and that I'll charge for all the extra time it costs me. They're gonna pay just as much for the job whether they get the equipment or I do, but they get more VALUE if I provide it.
VALUE is the thing that we need to get customers to see, not just initial cost. If someone cannot see that when it's properly presented to him, then he's a greedy fool who is destined to pay more in the long run. Avoid that person.

Dave0176

I know its tought to pass any job up, but some jobs just arent worth the aggravation.

Be honest with him let him, tell him get his material, then tell him it's gonna be X amount of hours to do the install at your hourly rate plus you helpers pay combined, and if any parts are wrong they will have to be returned all while you contine to get paid waiting. Let him know you will not supply one nut or bolt, that he is responsible for ALL material. It's either I get ALL the material or YOU get ALL the material, case closed.

j a_2

Wow I just saw and read this thread...I can't possibly imagine someone selling there product at cost...the rich are rich because in my opinion rich people ****....

rick in Alaska

I just give a total on all the work I do, but I don't break it down. People expect you to sell it at internet costs or less, which a lot of times is cheaper than what I can buy it for from my wholesaler, because of freight costs here. I have had very few people who want an itemized breakdown. The ones that do, I might give a material total and the labor total, but that is all. I then ask them if they ask for a cost breakdown when they go out to dinner. Hey, I can get that steak cheaper at the store! Why are you charging me so much for it?
Best just to give a total.
This is on service work I do. On a bid job, they already know the price and can either accept it or not, but it still does not broken down.
Rick

jonny88

Update,walked away.Took your advice even though its hard to turn down work.The breaking straw was he wanted to buy a booster pump and have me install.He also said he would help with install.Thanks guys for the input.Onwards and upwards......I hope.

Tinman

Walking away from those has always worked out for me. Something better always comes along. It's ok to say no.

ratio

Over the years, I've told all my bosses that

Not all customers are our customers.

I wish they'd listen more often.

tim smith

Here is how I have been dealing with it, I tell them that I sell materials with a markup, and charge xxx per hr. If they want to supply equipment, I will charge xxx per hr plus 50% and supply all other mat at normal sell price. Just my take.