Inflated invoice when the builder has ordered building materials

[Attimannen]

Why can't we distinguish between companies and craftsmen? As a craftsman, I don't get paid more due to number shuffling; I still have a salary on par with my wife who is a nursing assistant. Stop mixing up the concepts!

 

[jimih]

As a painting contractor, I have about a 35% discount on the paint. Consumers generally do not get this; at most, a "regular" consumer usually gets up to 20%. I typically add 10% to my price. This is normal at least in my industry. This means that both I and the customer benefit from me supplying the paint. A 10% markup on the contractor's price is reasonable.

I don't think anyone here is complaining about that pricing; it sounds very reasonable to me.

But the discussion was about craftsmen charging an unreasonably much higher price for materials than it would cost for the customer to purchase it themselves. And a 40% markup, as it seems to be in the OP's example, I consider to be unreasonably high, especially since the craftsman in question implied that the materials would be purchased at a good price.

 

[jimih]

Why can't we distinguish between companies and craftsmen, I as a craftsman do not get paid more because of number tricks, I still have a salary comparable to my wife who is a nurse's assistant, stop confusing the concepts!

It may have something to do with the OP's phrasing in the thread start:


The material was purchased by the builder himself at his nearest large building supply store. He recommended it because they "have the best prices." When I was to pay the builder's invoices, I received a copy of his material costs.


It might just be me, but I interpreted this as the builder being a craftsman, and it is also this craftsman who made the actual purchases. Whether the craftsman is employed or runs his own business is irrelevant, and so is what the craftsman earns. It is the craftsman who spoke with the customer, it is the craftsman who made the purchases, and it is the craftsman who more or less indirectly promised the customer good prices on the materials. If he does not have the ability to influence the material cost on the invoice, then he should not say such things as he said to the OP.

 

[Attimannen]

You have already answered the question yourself about whether hen is an employee or an entrepreneur.
As an employee, I never get to see any figures on what the jobs cost and would only recommend a building supply store if I knew it was the closest or had a special item.

 

[pappskallen]

Directly quoted from a craftsman in the thread.

I also think it sounds completely horrible. But it is a quote from a craftsman in this thread

But dear friend, you surely understand that it doesn't usually go like this; on the contrary, it is naturally an exception.
I would guess that the normal charging rate for a carpenter is between 350-450 + VAT, with or without material markup.

I know you have a great disdain for craftsmanship, and so be it, but don't mess it up and derail/troll so the whole thread becomes a mess.
Sigh....

 

[Attimannen]

A carpenter who charges 900/hour disappears quite quickly from the market unless the market is sick/overheated, but the customer decides what is the right price.

 

[Freddy_kruger]

No, there is no tradesperson who charges 900/hour on an ongoing account...

What the tradesperson earns on a fixed-price job is irrelevant to the customer, as they know what the job will cost, and then it's up to the tradesperson how efficient they are...

 

[magnuss]

What I reacted to is mainly the fact that the builder apparently recommended a certain construction company precisely because they "have the best prices." To make such a statement, and then give far from the best prices" to the customer, is in my opinion, borderline fraudulent behavior. As I interpret TS in the original post, the so-called "regular price" excluding VAT was 54 SEK each, and he was billed 76 SEK each. This amounts to a total price increase of 41%.

You yourself say that the customer has nothing to do with any agreements between the builder and the building trade. From that standpoint, it's completely pointless information for a builder to tell the customer that they get the best prices by buying from this particular building trade. Thus, it's reasonable to assume that what the builder is actually saying is that it's the customer who gets the best prices if the builder buys from this particular building trade. And then I mean that it's basically a lie right in the customer's face if, when the invoice comes, it shows a price that corresponds to about 40% above what can be considered the regular price.

Simply - what the contractor mentions about prices is his way of selling himself. These are the things you must learn to regulate and understand as part of the procurement process - not once it's done. If you don't understand what a seller/contractor is saying/selling, then you shouldn't sign either. Ask, clarify, check, and repeat until everyone has the same picture of the three basic elements of a project - schedule, scope, and cost. Just listening to someone and imagining that what they say means the lowest possible cost for me is just naive. Why does something like price comparison exist? There's a reason. What I miss is the equivalent for building materials, but they probably aren't interested in being exposed to competition, and therefore they don't publish their prices for comparison.

My problem is instead to successfully find a fully aligned picture with the contractor regarding the quality standards that should be achieved. Simply put - it would be great to find different craftsmen who take pride in what they do and therefore do it as well for a customer as they would at home. Wonderful when it happens, but I think that's the most challenging aspect.

 

[rockfarbrorn]

Rockfarbrorn: As someone knowledgeable, can you explain why the markup on material should cover "overhead costs"? What are these "overhead costs"?

I have yet to meet a craftsman who doesn't charge by the hour when picking up materials + the cost of the drive.

In short, this should include the pickup/loading of materials, mileage reimbursement is usually added. The issue today is that it is the construction companies that set the terms, which is completely unreasonable.

Someone wrote something about home services buying milk for 15kr instead because they get a discount. As someone knowledgeable, I can say that this was a very "spot on" analogy.

10 or 70% discount is irrelevant, it is what is on the bottom line that matters - for private individuals, ABSOLUTELY not for business owners. They play on the general public's lack of knowledge when it comes to what things actually cost.

This lack of knowledge also permeates this entire forum (don't want to sound mean) but about 95% of the price perceptions and suggestions I read that people give each other on this forum are so grossly incorrect that I usually chuckle and think: oh my god.

Many times I have gone through the numbers, for example, a cost estimate now on a thread where many estimate the cost to replace the floor structure and floor as well as all moldings, etc. to be about 40-50,000kr, I got it to 10,000kr with rather nice materials.

A beam at building store x costs 100kr, at a building store it costs 40kr, the business owner chooses building store x probably because they deliberately have a higher price thus he gets money on the side.

If people in general start reacting here and say: But hello, a beam surely doesn't cost 100kr? and if you pay 100kr you should change suppliers, then we have come a long way. "Yes, it costs that much..." most people think.

Then getting reasonable discounts as a business owner is not something private individuals should concern themselves with, it is only fair that if you purchase items for about 1 million + per year, you get a discount that you keep. However, it is currently at such unreasonable levels.

 

[mr_bygg]

No, the craftsman buys with HIS money and sells on to the customer!

This is where I think there may be some misunderstandings sometimes. The customer thinks they are paying for the craftsman's time, car, and mileage allowance to go and buy what is needed for the customer's job. Of course, the craftsman should be paid for further invoicing, etc., but one doesn't think it involves any major surcharges.

But what is missed is that you are actually paying the craftsman to go and purchase items for their business, which they also run alongside the craftsmanship. Then the craftsman sells the products to the customer, and depending on how much profit the craftsman wants to make from the sales business, it can become a more or less expensive deal for the materials.

Perhaps sometimes customers should ask a bit more beforehand, and perhaps sometimes craftsmen should be more clear about the arrangement to avoid discussions afterward.

 

[rockfarbrorn]

I think it's fraud. Suppose I call a company and purchase a service "I need a computer." Then an invoice arrives for 6000 SEK that I have to pay, 1000 for the work of finding the computer and 5000 for the computer. That invoice is a copy of the original invoice from the computer store for 5000 SEK. But if I call the computer store myself, it costs 3000 SEK. The price of 5000 SEK is not offered to anyone else, 2000 goes back to the person who bought the computer for me.

The alternative is to say "we charge 3000 SEK to find a computer for you." Then you're being honest. But you probably have to lower your price because you're too expensive.

This is caused by the bubble economy we have right now. The construction companies are doing too well, so they become greedy.

It goes more like this: Suppose I call a company and purchase a service "I need a computer." Then an invoice arrives for 6000 SEK that I have to pay, 1000 for the work to find the computer and travel to the store, and 5500 for the computer and loading. That invoice is a copy of the original invoice from the computer store for 5000 SEK. In the store, the computer costs 5000 SEK for an individual, but at Mediamarket 1km away it costs 3000 SEK.

 

[dudero]

And at Mediamarkt, it costs 3000 for the builder as well. Since Mediamarkt doesn't have any margin to share.

 

[Entreprenör 1]

All Entrepreneurs have the right to charge the prices they deem necessary even if they receive a discount. 12% on all purchases is not particularly much and it is a cost for the Entrepreneur to bring in materials, which is in order to charge for!

 

[MaxPax]

And at mediamarkt, it costs 3000 for the builder as well. Because mediamarkt doesn't have any margin to share.

And it also costs 500 kr to manufacture in the factory...

 

[Attimannen]

And the person who assembled it received 2 kr