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Q&As
Builder Price Mark Up
I am having a shower, bathroom and cloak room installed as part of a build project. I accepted a quotation which had several "budget prices" and sanitary ware has a budget price for the supply of sanitary ware for each room. I was asked to find items I would like and to let the builder know, and then he would give me a price for the supply of them, the budget for each room is £2000. There is a separate sum for labour.
I found Burlington items I wanted within this budget and let the builder know. However when he prepared the schedule and priced it, he quoted me full retail price from the Burlington website. For instance, the price of the shower I wanted was £930 but the Better Bathroom price and the Victoria Plumb price for exactly the same shower is £630! Prices for all the other items were correspondingly more expensive. A web site search for this particular shower showed prices from £530 to £679 from several dozen sites. I do not know where he sources his sanitary ware, but he is a large builder and I presume he had a supplier and gets trade prices and does not source it direct from Burlingtons, whose prices do not seem to bear any resemblance to the actual selling price!
He says "We can, of course, purchase at the rates you have found but we would still need to add profit and overheads as we would need to take responsibility for checking the items once delivered, ensuring they are correct and not damaged, dealing with any damages, chasing up missing items and to ensure everything is specified correctly prior to ordering. From previous experience there will always be issues that need to be resolved and can take up a lot of time".
The prices I found were retail prices and the suppliers offer trade accounts and further discounts on these. Whilst I can appreciate his need to cover costs and make a profit, the prices I found total just over £6000 and his price is just under £9,000!
This is part of a £500,000 build and we are being charged separately for a site manager, who I assumed, would be responsible for specifying and checking? These are the first items I have been asked to choose myself and he has priced in this way, so it came to rather a shock and has somewhat shaken my confidence in his pricing generally, hitherto I had absolute faith that he was being fair. Is my reaction unwarranted and is this normal and reasonable?
One Answer
If you have a separately engaged project manager, then it would be down to him/her to source goods and deal with delivery and checking everything was in order. If the site manager is provided via the main contractor, then it’s not his job to check deliveries for anything that you’ve sourced yourself (albeit you’d hope that he’d help out in this respect).
Given the disparity in costs you could source the goods yourself for £6,000, but you would then be responsible for checking their condition on delivery and dealing with any missing or damaged items. If anything got damaged after delivery, then you’d probably need to take the hit on that as well, unless it was clearly a case of negligence or incompetence on the part of the main contractor or his sub-contractors. In terms of the price being full RRP, this is unusual in that you’d normally expect the builder (as he’s later gone on to say) to source the goods and then add on his margin (which should certainly be less than 50%!) for you. If you don’t want to go down the route of sourcing the goods yourself directly, then it’s probably a case of sitting down with the builder and negotiate down from the £9,000.
One last thing to note. If you source the goods yourself, you need to pay VAT and then claim it back after completion. If the builder sources them for you then you should get them zero-rated.