Would you pay a contractor an 80 to 94% markup for supplies or equipment?

1. 76

   flacoinohioposted 10 years ago

   Would you pay a contractor an 80 to 94% markup for  supplies or equipment?
   
   I received a quote for a replacement chlorine pump from our pool maintainence company indicating that the cost of replacing a worn out Chlorinator would be $491.  After checking the manufacturers website as well as a few other pool supply vendors, I can purchase the same pump for as low as $252.  I presented the proposed estimate for the replacement pump and labor, which comes to $640 after taxes. The Board just approved the same company to install a pool cover and remove and install new hand rails and ladders in our pool which may have the same mark up.  Is it time for a new contractor?

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2. 91

   heidithorneposted 10 years ago

   Contractors have a LOT of expenses that are in addition to cost of supplies and equipment. Trucks, insurance, labor, overhead and more. That's why their prices may be higher. If you can buy the pump online, some contractors may agree to install. However, be aware that there may be warranty issues. Your board (I'm presuming a condo board), may have reasons for dealing with this contractor such as professionalism and reliability.
   
   FYI, in many businesses, the markup on product can be as high as 2 to 3 times cost... and that's just to keep them in business.

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3. 76

   flacoinohioposted 10 years ago

   I am not sure what to think about this comment, I do not think the any industry standard would be 2-3 times the wholesale or retail price.  Maybe this is why many small businesses fail due to excessive mark ups.  I am not sure why we use this company, I also know from past invoice reviews that not every item has the same mark up rate.  Some items are only marked up 15 to 20% while others such as the Chlorinator I mentioned is marked up 80-94%.  As far as the transaction goes, I am expected to pay the inflated price, an inflated delivery fee to have it brought to my pool, and an installation/labor fee.  This company will be out of business, especially after I and other customers who take the time to check out the information on estimates before they agree to the price start writing consumer reviews.

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   1. 91

      heidithorneposted 10 years agoin reply to this

      You'll have to go with your gut instinct then. If you feel it is unwarranted, then absolutely insist on additional bids. Be aware that contracting is a cost intensive business (speaking from working in that arena for many years). Good luck!

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