contractor mark up on cabinets?

cbriskin01August 20, 2014

We have a hired a contractor to remodel our kitchen. It is a complete demo and we are having custom cabinets made. We want to use a cabinet maker that we met and who gave us an earlier bid a year ago. At first the contractor wanted us to use his cabinet maker, but is willing to work with the one that we found who drew up the initial kitchen plans. We paid the cabinet maker $400 for the plans. Our contractor made some minor adjustments and is now in conversation with the cabinet maker we want. Our contractor said he would mark up the cabinets 20% (his standard mark up). I'm not sure if this is appropriate or not. Yes, he is talking to him to revise the original bid, and I assume the $400 we paid upfront would be applied to the balance. Advice please. Should we accept the mark up or negotiate?

Thank you for reporting this comment. Undo
christina222_gw

There is no way I'd pay the markup. You already had a deal in place and a quote before the contractor ever came into the picture.

    Bookmark   August 21, 2014 at 12:23AM
Thank you for reporting this comment. Undo
PRO
Sophie Wheeler

He has to install and coordinate the install with the rest of the trades, perform quality control, make sure that they fit the overall space. If you don't think his supervisory work for that aspect of the project is worth the industry standard 20% , then why aren't you your own cotractor and assuming responsibility for all of that? And deal with all of the headaches and timeline conflicts and mismeasurements yourself.

You'll pay markup on ANY materials used on the job. Its part of the total compensation package. Or, you'll pay a higher rate for the work for the labor as a total if you remove the markup. And he won't be reponsible for any of the mistakes and extra time that costs you more money. He'll just be a hired sub contractor for simple labor, and it'll all rest on you.

    Bookmark   August 21, 2014 at 7:31AM
Thank you for reporting this comment. Undo
shannonplus2

I agree with Hollysprings. Also, this will also apply for all purchases of appliances, sink, faucet, lighting, electrical parts, etc. I.e., you can buy all these things yourself and get them for less than if you buy them through your contractor (in spite of the "contractor discount", you will still pay less if you buy yourself, especially online). But then you bear the responsibility and the time needed to purchase, select, make sure the specs fit with your space, accept delivery (i.e. waiting at home for the truck to arrive), deal with mistakes on orders, deal with items that come in damaged, deal with items that come in late, etc. That's what that 20% pays for. Having said all that, I chose to purchase all these things myself, and it was a huge time-suck, and stressful. So keep that in mind.

    Bookmark   August 21, 2014 at 8:34AM
Thank you for reporting this comment. Undo
ajc71

Hollysprings nailed it, well said

    Bookmark   August 21, 2014 at 9:11AM
Thank you for reporting this comment. Undo
dilly_ny

I understand the perspective of holly springs and other advice above, but I would not be inclined to pay a "mark up" or more aptly called a commission to the contractor. The cabinets are already marked up by the cabinet maker and the contractor is just trying to pad his pockets. Maybe it's industry standard in some areas, but it's also possible in my area to hire a contractor for labor only. For My renovation, I picked out, ordered and arranged delivery of everything and paid the contractor and crew for labor.

I've steered clear of any contractor who tries to push me into using their vendors or fills the contract with "allowances." It just doesn't sit well with me.

Do you pay an electrician more money to hang expensive light fixtures than inexpensive fixtures of the same type?

    Bookmark   August 21, 2014 at 10:03AM
Thank you for reporting this comment. Undo
live_wire_oak

Yes, you DO pay more to an electrician to hang a $1000 chandelier than you would a $50 pendant. His risk of damaging the product is much higher.

If you hire each trade separately, then you i acting as the GC on the job, and the risk rests on your shoulders. Which, if you understand that fully, is fine. Just understand that if the cabinets come in 3" too long for one wall and you have to wait for the cabinet maker to fix that, then that also pushes out the counter installation crew, and the painting touch up crew, and the plumber....... and all of that. And if you've already contracted with those tradesmen and scheduled them, you will have a very tough time getting them rescheduled as you just proved to be an unreliable GC.

A GC earns his 20%. You will too if you choose to forgo using one.

    Bookmark   August 21, 2014 at 10:21AM
Thank you for reporting this comment. Undo
SuziKD

Yes, Dilly, you DO pay an electrician more to hang a more expensive fixture. It may have a more complex install, etc. So that's possible.

I agree with Holly above. Every day I see people who think they can coordinate their own install with zero knowledge. Experience comes at a price.

That said, if I were the contractor, I would bury that 20% somewhere else in my price. Why annoy people for no reason? That's like the electricity fee added to hotel rooms when electric rates soared. Or resort fees. And so on. Just raise your basic price to cover "fees".

    Bookmark   August 21, 2014 at 10:24AM
Thank you for reporting this comment. Undo
cookncarpenter

I agree with the others in that if the GC is coordinating and supervising any sub, then his fee is justified.
Typically the fee is negotiable and should be agreed upon before any work begins.
I am quite surprised at 20% though. It must be regional, as in So Cal the typical fee is 15%, and often in competitive bidding it can be12% and even 10% under certain circumstances...

    Bookmark   August 21, 2014 at 12:02PM
Thank you for reporting this comment. Undo
cbriskin01

Thank you for all the comments. We are still discussing the details. We haven't signed the final contract yet.

    Bookmark   August 23, 2014 at 9:37AM
Thank you for reporting this comment. Undo
Trebruchet

cbriskin01:

You're asking your GC to substitute a known risk, his cabinetmaker, for an unknown risk, yours, and questioning whether or not it's fair for him to be compensated for the risk he's taking?

    Bookmark   August 23, 2014 at 9:56AM
Thank you for reporting this comment. Undo
thepeppermintleaf

I would be annoyed if I knew the contractor was marking up the price of the cabinets instead of just charging more for his time. Either way, you may be paying the same amount. But since you had already gotten a cabinet quote on your own, if I were the contractor I would have just charged more for labor. In my mind adding a flat 20% on top is kind of like the home parties where they try to get you to sell their products by telling you that they make 50%- annoying and making you feel like you're being cheated. A more appropriate way to phrase it would probably be - You need to figure our labor/ time into the cost of building the kitchen. A good idea is to figure approximately X% on top of your material costs.

    Bookmark   August 23, 2014 at 10:29AM
Thank you for reporting this comment. Undo
jellytoast

I'm not sure I understand this. Is the contractor hiring a sub to do the cabinet install? Wouldn't he already be charging an extra 20% on top of that labor charge for "supervision and coordination"?

    Bookmark   August 23, 2014 at 10:48AM
Thank you for reporting this comment. Undo
PRO
Sophie Wheeler

All materials on the job get a contractor markup when you use a GC. Cabinets, counters, lighting, plumbing. If the GC is going to have to be responsible for the product, he gets the markup. If you remove that responsibility from his scope of work, like hiring a cabinet maker directly to create and install, then you have assumed the GC role on the job---and all of the responsibility that does with it. And if you're going to assume that role, then you actually have to do all of the research and due diligence about the tradesman and the products that the GC would do. You can't fall back on the, ''But I didn't know that detail or really understand that problem.''

If you want to treat a General Contractor like a carpenter sub-contractor, don't be surprised when it bites you. Hard.

    Bookmark   August 23, 2014 at 12:45PM
Thank you for reporting this comment. Undo
chiefneil

I'd clarify with the GC exactly what you're getting for the 20% markup. Have him spell it out in writing in the contract, then decide if it's worth it.

In my industry we call it "one throat to choke". You have one guy to yell at when anything and everything goes wrong. That guy takes care of everything behind the scenes so you don't have to.

If that's really what you're getting (and don't assume it is), then it might well be worth the markup depending on how much you value your time and sanity. And again, get it in writing, enforced via however much your final payoff is.

    Bookmark   August 23, 2014 at 2:58PM
Thank you for reporting this comment. Undo
dilly_ny

Live Wire Oak - if you " pay more to an electrician to hang a $1000 chandelier than you would a $50 pendant" that's obvious because it's not the same type of fixture or the same labor involved to hang. I've never had an electrician ask me the price of a fixture. I would not pay an electrician more to hang a $50 pendant than a $500 pendant that requires the same labor. In fact, my contract included x number of high hats, 1 chandelier and 2 pendants. It was up to me to pick them out and obtain them. This is customary in my area when you are not using a designer.

But obviously there's many ways of doing the same project and regional as well as price point considerations that going into hiring professionals.

    Bookmark   August 24, 2014 at 7:15AM
Thank you for reporting this comment. Undo
snookums2

"Yes, he is talking to him to revise the original bid, "

Please clarify what this means.

Your GC's overall bid Includes what he would make on a cabinet markup. They spread charges out over things to cover various work involved. Normally he'd have a wholesale discount with his own supplier (they can pass some of that on to the buyer or not). The work his markup covers still remains. So he needs to somehow compensate for that cabinet overhead and loss of income when you go with your own supplier.

When you say the cabinet bid is being revised, do you mean the cabinet maker is lowering his price (with a builder discount), for this new working arrangement?

Who is installing?

    Bookmark   August 24, 2014 at 11:54AM
Thank you for reporting this comment. Undo
xedos

Who is meeting the delivery truck?

Who is letting the installers in, showing them where the power and water shutoffs are?

WHo's making sure that the designer's intent for where the low voltage lite transformers are going to be hidden is executed, and how the trim carpenter is going to treat his baseboard and crown molding with the cabinet man's toekick and cabinet crown?

Do you want to pay and hourly professional fee for ALL of this time + trip charges, or would you rather it lumped in the 20%? I can assure you you'll pay more by counting the hours than paying the %.

dilly - I'm sure you'd hit the roof the second you saw my months bill for $500 +++ just for meeting the truck, checking off the cartons, and making sure the guys don't dent the walls, run over the mailbox and leave their coke cans on your fireplace. There's also my cell phone minutes and data charges that I'll pass along to you on top of that. If your job is more than 20 min. form our studio, you'll be paying for my travel time as well.

Look, if you want professional help you'll pay. Period !

If you just want labor, you'll pay too. You just won't get the wealth of EXPERIENCE, savvy, and intelligence , that comes with a seasoned professional.

When you break your arm, would you rather have me set it or an Orthopedist ? I've trained with EMTs, taken basic First Aid
courses. I've also worked in and E.R. and have preformed knee replacements, bone setting and general surgical stitching, so I've got more than a basic understanding of what's needed. I didn't just watch the medical porn channel last nite at a Holiday Inn Express.

I haven't graduated from medical school nor passed the boards licensing me to practice.... but I have enough skill to preform the tasks with a reasonable chance of success. I guarantee you I'll be cheaper than the Doc charges you at the clinic, and I'll even let you bring your own bandages and plaster. You won;t have to wait long hours either.

Interested ???

Didn't think so. You want an experienced PROFESSIONAL to do that work don't you ?

    Bookmark   August 24, 2014 at 3:32PM
Thank you for reporting this comment. Undo
Texas_Gem

In the original bid from the cab maker, did it include install or just the cabs?

If it included install I would not pay a 20% markup.

I ask because my custom cabinet maker built and installed all of my cabinets but I'm not sure if this is standard everywhere.
Every cab maker I spoke with also installed the cabs.

    Bookmark   August 24, 2014 at 5:05PM
Thank you for reporting this comment. Undo
sahmmy_gw

For those of you grudging the GC his 20%, you know, the guy has to put food on the table too. Would you be OK if your boss said to you, "I don't think your worth as much as I am paying you, so I'm going to cut your salary by 20%."

    Bookmark   August 24, 2014 at 5:11PM
Thank you for reporting this comment. Undo
snookums2

Be sure to get in writing what this 20% covers ie what he will and will not be responsible for with regards to the out of network cabinets. Don't assume anything based on a generalized job description. Those ultra responsible people described above are hard to come by. Finger pointing and shirking responsibility is more the norm. Don't assume anything.

    Bookmark   August 24, 2014 at 6:02PM
Thank you for reporting this comment. Undo
amberm145_gw

It's my understanding that the markup on materials covers the contractor knowing what to buy, where to buy it, arranging delivery, having an account with the vendor, paying out of pocket to the vendor and waiting to be reimbursed, etc. If the client goes directly to the vendor and does all that directly, then why would you pay that to the contractor to do it?

You would then pay the contractor for his time to do the actual install. Sure, there might be more risk to the contractor, for the cabinets not showing up on time, or not installing the same way the stuff he knows does, and the contractor might increase his fees for that. But to insist on applying a 20% markup on something the customer had sourced before she hired the contractor? On top of the fees for the actual work? That's just robbery.

It's a lot like if my boss decided that he is going to take on more responsibility at the office, so I can now have Fridays off. But I insist that even though I am doing less work and he's doing more, I need to keep getting paid for Fridays. Of course, if my lifestyle requires me to work and be paid full time, then I'm free to get another job. But to insist on being paid for work that I'm not doing? Or to insist that my boss is not allowed to cut costs by giving me less work? Yeah, good luck with that.

    Bookmark   August 24, 2014 at 8:12PM
Thank you for reporting this comment. Undo
jakuvall

Yes it's normal. Some contractors prefer to hide the fact and hide the charges. Every now and then one asks me to add it into the cabinet price and not divulge it. I refuse. Over the years I've seen far better results working with folks who have transparent pricing.
It is possible to hire someone at time and materials, never seen that work in a customers favor though.
As a consumer you are free to decide who to do business with. You are not entitled to tell them what business model to use.

    Bookmark   August 25, 2014 at 7:28AM
Thank you for reporting this comment. Undo
renov8r

We kind of split the contracting. We got our own electrician, paid him separately, our own appliances, paid them separately, our own gas fitter and paid him separately. and our own paper hanger and paid her separately. We went with custom cabinets made and installed by the cabinet maker. Our GC and designer both recommended him. They seem to have a 3 way working arrangement. Our GC earned a percentage of the cabinet price. I think though that if I sourced and worked on my own with the cabinet maker before hiring the GC I would only expect to pay a percentage on any work done afterwards on the watch of the GC.

    Bookmark   August 25, 2014 at 10:58AM
Thank you for reporting this comment. Undo
snookums2

A lot of people are unaware of product markups by designers, gc's, trades people and don't understand the why of them when they find out. Thing is, the pros buy the products wholesale, getting (commonly) that 20% discount - which they can then pass any portion over to the customer, depending on how they charge their customers (aka, their "business model", which laypeople know nothing about the various billing arrangements that can be used).

So my question is, are you now paying 20% more for your cabinets -he is not getting the trade discount - and how much does that amount to?

You can't really change what he wants to charge for the job though. Even if he were to drop it, he might build it in elsewhere anyway where you are unaware.

You have to decide how much confidence you have that he is worth it and will, in fact, pay attention to details and actually oversee the cabinet install and take whatever responsibility that involves, especially when there are problems. I would be real clear about that, and any differences due to outsourcing, and get it in writing.

    Bookmark   August 25, 2014 at 12:04PM
Thank you for reporting this comment. Undo
jellytoast

Unless the contractor can negotiate a discount on the cabinets which can be passed on to the Homeowner, I don't see where he has "earned" the full 20% markup on this "materials" portion of the project.

To answer the OP's original question of, "Advice please. Should we accept the mark up or negotiate?", I would definitely attempt the "negotiate" route.

    Bookmark   August 25, 2014 at 12:09PM
Thank you for reporting this comment. Undo
ajc71

Hollysprings laid the whole thing out perfectly at the beginning of this:

"He has to install and coordinate the install with the rest of the trades, perform quality control, make sure that they fit the overall space. If you don't think his supervisory work for that aspect of the project is worth the industry standard 20% , then why aren't you your own cotractor and assuming responsibility for all of that? And deal with all of the headaches and timeline conflicts and mismeasurements yourself.

You'll pay markup on ANY materials used on the job. Its part of the total compensation package. Or, you'll pay a higher rate for the work for the labor as a total if you remove the markup. And he won't be responsible for any of the mistakes and extra time that costs you more money. He'll just be a hired sub contractor for simple labor, and it'll all rest on you."

Seems very clear to me, isn't this the definition of a general contractor? Why would anyone suggest that they negotiate with the GC to not pay his overhead, supervision etc?

And for anyone suggesting that he should not be paid the 20% if he is doing the install....I am not sure where you are from, but where I come from the installers show up the day they are supposed to and install the cabinets as drawn and if there is something that is wrong in measurements or with the cabinets they pack up and leave and will come back when you get your problems worked out and then they charge you to re-mobilize

    Bookmark   August 25, 2014 at 12:30PM
Thank you for reporting this comment. Undo
jellytoast

"Why would anyone suggest that they negotiate with the GC to not pay his overhead, supervision etc?"

I can't speak for anyone else, but I can tell you why I would suggest negotiating the 20% for the "supplying cabinets" portion of the project. As amberm145 and others have pointed out, "the markup on materials covers the contractor knowing what to buy, where to buy it, arranging delivery, having an account with the vendor, paying out of pocket to the vendor and waiting to be reimbursed, etc. If the client goes directly to the vendor and does all that directly, then why would you pay that to the contractor to do it?"

If the Homeowner has already taken care of that for this portion of the job, and has not received a contractor-negotiated discount on the cabinets to help off set the price hike, it seems like the Homeowner might be in a position to negotiate a better price for this one "materials" portion of the job. Twenty percent added to the cost of the cabinets is likely a significant chunk of change

I don't think anyone is "begrudging" GC's their due for services rendered. Some of us are just questioning and debating whether or not certain charges are fair, which is a completely reasonable thing to do on this forum.

    Bookmark   August 25, 2014 at 2:05PM
Thank you for reporting this comment. Undo
amberm145_gw

"Twenty percent added to the cost of the cabinets is likely a significant chunk of change"

Exactly. I currently have 2 quotes for cabinets. Same brand. Supposedly the same configuration. One is for cabinets only. One is for cabinets installed. Cabinets only is $21k. The cabinets installed is $24k. So, if I were to buy the cabinets only, and hired someone else to install them, I should pay the install fee PLUS another $4200 for a GC to accept delivery? There are still counters, flooring, plumbing, electrical in this project. I happen to be GCing it myself. But if I wasn't, there would be someone I was paying separately to oversee everything. And I wouldn't begrudge that person their fees. But $4200 for accepting delivery, when I'm already paying them to be there anyway? When the cost of installing them is ostensibly $3000?

    Bookmark   August 25, 2014 at 3:03PM
Thank you for reporting this comment. Undo
snookums2

Usually the markup on goods also covers handling any problems , like damage, misorders, reorders, resolving any issues that come up. Any of his time involved in the cabinets, like the meeting and negotiations he's already done with this cabinet maker.

This is another reason they like to deal with their own vendors with whom they have established relationships, known dependabilities and product quality.

$7200 is a lot of upcharge on a cabinet purchase though.
Of course people want to understand what it's for, especially when they've provided the materials themselves. And if all goes well ... which it often if not usually does ... what have they paid that extra $4200 for. Then again, if there are problems, the homeowner is footing the bill for other people's errors and inefficiencies, when those people should have taken more care and attention at the front end.

This post was edited by snookums2 on Mon, Aug 25, 14 at 16:23

    Bookmark   August 25, 2014 at 4:17PM
Thank you for reporting this comment. Undo
threepinktrees

This is interesting for me. Doesn't it somewhat depend on what the GC is hired for? We are starting into a kitchen remodel. I have already sourced and purchased most of the materials. We brought the GC in to coordinate the subs, and of course he marks up their charges, which I understand. It never occurred to me that he would want to charge me a fee for the items I hunted for already and he made no mention of it whatsoever apart from congratulating me on the deal I found on our range hood. We used this same GC for other similar projects in our last house and while he marks up sub labor and charges his own hourly he did not charge me a fee for anything we had already purchased and had on site.

    Bookmark   August 25, 2014 at 4:49PM
Thank you for reporting this comment. Undo
live_wire_oak

It's not just accepting delivery. There's a lot more. Like actually verifying that the cabinet maker does quality work that he would be willing to work with. Like verifying that the guy has a solid reputation for business as well as quality. There's nothing like ordering cabinets from an artisan who's a poor businessman and closes the doors to his shop right after he takes your money. Your GC does that, and he's on the hook for the money. You do that, and it's, "We're waiting on the cabinets. Who was your second choice to cut a check to for them?"

Then there's the field measurement, and the consultation with the designer and the cabinet maker about that wavy ceiling that will have to have a compound crown in order to be able to not show how wavy it is. There's the check in, which is more than just "accepting delivery". It's opening up the boxes to check for hidden damage, and accounting for and reordering those damaged or missing items. Then there's the issue of the cabinet that comes too large or too small anyway, and thinking on his feet about how to fix that with as little down time as possible. It's coordinating the fix on the cabinets with the cabinet maker after the counter guy scuffs them during the counter installation. It's teaching the homeowner how to adjust the doors and drawers and to not use a Magic Eraser on them, and how to use the touch up kit for nicks and scratches. It's the callback in 18 months for the 2nd course in how to adjust doors and drawers and use the touchup kit because they have a big shindig and forgot everything that was told the first time. It's being THE "go to" for all of that, and more. All of the problems that impact that and that interact with the other trades. It's a giant jigsaw puzzle and the GC is the one controlling the placement of the pieces by each member of the team.

Try to do that yourself, and be on site putting out those inevitable small and large fires. It's exhausting to do, even when you're an expert. Their money gets earned. Every penny. For an amateur, the only way that they can do it is to extend the timeline. Significantly extend the timeline. And still something will be missed because the experience isn't there. You don't know what you don't know!

    Bookmark   August 25, 2014 at 5:38PM
Thank you for reporting this comment. Undo
snookums2

Theoretically. But I would hire that guy.

    Bookmark   August 25, 2014 at 5:47PM
Thank you for reporting this comment. Undo
jellytoast

"Like actually verifying that the cabinet maker does quality work that he would be willing to work with. Like verifying that the guy has a solid reputation for business as well as quality."

The Homeowner already had the cabinet maker lined up. If the Homeowner isn't capable of determining whether or not they are hiring a quality cabinet maker, how are they going to determine whether or not the GC they are hiring is up to par? A Homeowner that is so clueless that they have to call their GC back to the house to figure out how to use a touch-up kit is not exactly the "average" customer.

As snookums2 says, not all jobs are filled with errors and complications, and whether or not the GC 20% upcharge on the cabinets is worth it or not is something the OP has to decide. My cabinets went in with barely a hiccup so I'd have a hard time justifying an extra 20% tacked on to their total, plus another 20% tacked on to the labor portion of the bill.

    Bookmark   August 25, 2014 at 7:09PM
Thank you for reporting this comment. Undo
neilstaite

I can only speak to my experience.

In my case, we did a full 1st fl. reno last year and i retained the same GC we used 10 years earlier for a huge reno. The overall budget was in around $150k (w/o appliances) and my GC charges 20% mgmt fee on everything.
Given the extent of the project and the fact that he's a great GC, with amazing subs who I trust 110% he was the right pick for us.

I would like to think that because we were a great client - organized, decisive, prepared, easy going, low stress (don't mistake this for a pushover) and open to discussions, when we got to the cabinet quotes they were much more than anticipated.

His solution? Allow us to deal direct with the cabinet maker knowing that the designer we were using was known to him and he knew that most of the lifting would be on the designer. The designer was ok with that. By dealing direct - we saved the 20% on the cabinets - which was a BIG savings. And the GC and designer made sure they were looking out for us.

I guess what I'm saying is that a good GC is worth every penny - and if you're a good client (see definition above), many GC's are open to creative solutions when it comes to trying to stay on budget.

Good luck

    Bookmark   August 25, 2014 at 7:13PM
Thank you for reporting this comment. Undo
jellytoast

"I guess what I'm saying is that a good GC is worth every penny - and if you're a good client (see definition above), many GC's are open to creative solutions when it comes to trying to stay on budget."

Negotiating can be effective.

    Bookmark   August 25, 2014 at 7:49PM
Thank you for reporting this comment. Undo
Trebruchet

My fairly asked question of 26 posts ago remains unanswered. It must be too tough.

    Bookmark   August 25, 2014 at 8:35PM
Thank you for reporting this comment. Undo
snookums2

I'll answer it.

"You're asking your GC to substitute a known risk, his cabinetmaker, for an unknown risk, yours, and questioning whether or not it's fair for him to be compensated for the risk he's taking?"

If their cabinetmaker is a problem, then the risk and additional expense can be theirs. That can be written into the contract. I would not expect my GC to pay for the repercussions of my choice if there were problems. As a matter of fact, if something ends up being more complicated than the estimate, they have no problem billing for the extra work. And I would expect same. They also bid to cover problems, not smooth sailing. So there's already a safety net in place. Only once has a HI contractor reduced charges because it was not that involved and took minimal time.

To pay $4200 for any possible problems and headaches that might never actually occur, however, doesn't sit very well. Most of us get paid for what we do, not for what we might have to do.

    Bookmark   August 25, 2014 at 9:54PM
Thank you for reporting this comment. Undo
jellytoast

"Most of us get paid for what we do, not for what we might have to do."

Ain't that the truth.

"You're asking your GC to substitute a known risk, his cabinetmaker, for an unknown risk, yours, and questioning whether or not it's fair for him to be compensated for the risk he's taking?"

Isn't the homeowner taking a risk that the GC's cabinet maker isn't as good as the one they chose? Unless they've done business with him before, they are taking a risk on the GC. Seems to me that allowing him to choose their cabinet maker doubles that risk.

    Bookmark   August 25, 2014 at 10:40PM
Thank you for reporting this comment. Undo
cookncarpenter

I agree with snookums, if the owner hires their own sub, the GC has the right to waive responsibility (and risk) for that sub.
However, if the owner expects the GC to supervise, coordinate or manage that sub, then compensation for those duties is only fair. What that compensation is, should be negotiated and agreed upon before any work begins.

    Bookmark   August 25, 2014 at 10:53PM
Thank you for reporting this comment. Undo
Trebruchet

" Most of us get paid for what we do, not for what we might have to do."

And there lies the problem. People who are paid a salary and/or work hourly have virtually no risk and mistakenly assume that a business owner is the same as they are.

They are not.

When a job goes south, the measly 20% on that job usually evaporates instantly, and it takes the 20% from the previous 4 jobs to make it right.

When you go to your job, you deserve to be paid for the work you do. When I go to my job as a contractor, I deserve to be paid not only for the work I'm doing, but for the risk I'm bearing.

    Bookmark   August 26, 2014 at 8:31AM
Thank you for reporting this comment. Undo
jellytoast

"When you go to your job, you deserve to be paid for the work you do. When I go to my job as a contractor, I deserve to be paid not only for the work I'm doing, but for the risk I'm bearing."

Fair enough, and that makes sense, but I've seen contractors write much of their risk out of their contracts. For instance, my granite contract pretty much covered all of their potential loss bases, including any damages to my home or property during the install. Even if a slab was broken, they could "repair" or "replace."

    Bookmark   August 26, 2014 at 9:53AM
Thank you for reporting this comment. Undo
jakuvall

"...but for the risk I'm bearing"
Once got a call from an guy installing a paneled dishwasher, he was a sub for either Sears or one of the box stores. He had damaged the panel and was looking for a replacement, apparently he was on the hook for the cost. The guy was near tears, cost of the panel was 4x's what he was getting paid to install the DW. Don't know how it ended since it was not for a client of mine. I would bet he never allowed himself to be in that position again though.

    Bookmark   August 26, 2014 at 9:57AM
Thank you for reporting this comment. Undo
jellytoast

"... but for the risk I'm bearing"

Can't help but think of all the posts I've read on this board from unhappy customers who feel it is THEY who are on the losing end of the risk taken. Customers are taking a risk as well.

    Bookmark   August 26, 2014 at 10:03AM
Thank you for reporting this comment. Undo
ajc71

"Can't help but think of all the posts I've read on this board from unhappy customers who feel it is THEY who are on the losing end of the risk taken. Customers are taking a risk as well."

Customers have the option to not pay until they are satisfied...what risk is there when you the customer is holding the money

    Bookmark   August 26, 2014 at 10:10AM
Thank you for reporting this comment. Undo
Linelle

Is it reasonable to assume that the OP (homeowner) is paying a higher price for the cabinets than the GC would if he used the same vendor? Or does it not work that way for cabinets, with the contractor getting a lower price?

If the GC got them for less, then 20% of that would be less and it would sit better with me. If I'm paying full retail and then 20% is added, not so much. For a bathroom vanity I ordered it through my designer, paid in full and took delivery of it myself. My GC worked with my designer so he knows the cabinets and also how much I paid for them. Maybe 20% was built into my contract.

I bought my own light fixture and did all the legwork for that. My GC never asked me what it cost. His contract simply covered installing a light I would provide.

    Bookmark   August 26, 2014 at 10:48AM
Thank you for reporting this comment. Undo
snookums2

"When a job goes south, the measly 20% on that job usually evaporates instantly, and it takes the 20% from the previous 4 jobs to make it right."

So, prices are so high because we are funding all the screwups.

Why should I have to pay for their screwups or someone elses' s project problems. And I don't mean that to deny an honest or human mistake. We have all seen here the carelessness, inefficiencies, plain ineptitude or sheer wrecklessness that goes on, if not firsthand. Lots of rushing, blow out jobs, lack of supervision, no time for details or communications, dutiful care with property, or training & reading instructions. That's not the kind of risk taking I want to fund. Maybe if we weren't charged so much to cover all the errors or redos (many or most of which we simply have to accept and live with or cross our fingers), the bad performers would be weeded out. Survival of the fittest sounds pretty good in this situation.

Likewise, I wouldn't say employees have no risk. If they screw up the job, they lose their employment.

Most get paid for what they contribute, not for what they screw up.

This post was edited by snookums2 on Tue, Aug 26, 14 at 11:01

    Bookmark   August 26, 2014 at 10:56AM
Thank you for reporting this comment. Undo
sjhockeyfan325

Why should I have to pay for their screwups or someone elses' s project problems

In everything you buy, product or service, a portion of what you are paying covers other people's "screw-ups" and "project problems". The price of a blouse at Macys accounts for the fact that they may not sell all of their inventory. When my fabricator screwed up one side of my kitchen (cut no sink where the big sink was supposed to go - easy fix - but cut a big hole where the prep sink was supposed to go, so the slab had to be replaced at his cost), I just assumed everyone pays 10% more than they would if there were never any screw-ups. That "extra" pays for the once-in-awhile mistake. If he never makes a mistake, sure, he makes more money, just like if you never got sick, your insurance company would make more money. Spread the risk.

    Bookmark   August 26, 2014 at 11:35AM
Thank you for reporting this comment. Undo
jellytoast

"Customers have the option to not pay until they are satisfied...what risk is there when you the customer is holding the money."

The risk of a lien against their property for failure to pay? The risk of damage to their property? The risk of shoddy workmanship which then has to be trusted to the same person who first did the shoddy work to repair satisfactorily?

Then there is the fine line between what a contractor feels is satisfactory and what the customer feels is satisfactory, which is something we see a lot of on this forum with opinions varying widely. There are risks on both sides of the fence. It can be just as stressful and risky for customers to deal with contractors as it is for contractors to deal with customers. If a contractor has written it into his contract that he is not responsible for incidental damages to a customer's property, the customer is then taking on that risk.

Honestly, when I hire a contractor, I am hoping that he is experienced and knowledgeable enough to have minimized his risk both to himself and to me. I am assuming he knows enough about his employees to know that they are not going to be costing him more than they are making him. I am assuming that the money I am paying him will not be used to finance screw-ups and mistakes, but will rather generate a profit for him and his business. And I am assuming that if mistakes are made, they will be on the small side and not eat those profits in one fell swoop. If I thought otherwise, IâÂÂd likely be thinking about hiring someone else.

This post was edited by jellytoast on Tue, Aug 26, 14 at 12:07

    Bookmark   August 26, 2014 at 11:40AM
Thank you for reporting this comment. Undo
ajc71

If during your research on various GC's that you are considering hiring, checking references, local court records, registry of deeds etc...and you see that the GC has been involved in liens, lawsuits (against and for). I would think that you would pretty easily be able to eliminate any potential problem contractors pretty quickly

Jellytoast: Lot of hoping and assuming in your post when you are considering hiring someone

I would never hire anyone if I had to hope and assume anything about them

    Bookmark   August 26, 2014 at 1:37PM
Thank you for reporting this comment. Undo
jellytoast

"Lot of hoping and assuming in your post when you are considering hiring someone."

I never suggested skipping due diligence on the part of the consumer. But when hiring someone that I have no personal experience with, I still have to hope that my research will pay off and everything will work out fine on my job. If you have found a way to be 100% sure that the person you are hiring will not present you with any surprises, please share!

    Bookmark   August 26, 2014 at 2:22PM
Thank you for reporting this comment. Undo
sjhockeyfan325

I would never hire anyone if I had to hope and assume anything about them

How would you avoid that? You do your due diligence, and then you still "hope and assume".

    Bookmark   August 26, 2014 at 2:23PM
Sign Up to comment
More Discussions
palimpset....and others....kitch cabs, dark AND light?
what about light maple upper cabinets and dark lower...
mainewire
Feedback on revised kitchen layout
Hello again! After receiving some great feedback for...
kevinhoene
Kitchen colors....need something happy and vintage :)
I want to try to go a bit vintage with my low-dollar...
lavender_lass
Help with kitchen layout - main issue is where to put the ovens
I need to finalize my kitchen design so all feedback/suggestions...
keagle
1880s house kitchen: need to work in the current space
Note this is cross-posted at suggestion of a reader Plans...
islandgarden
Sponsored Products
Oiled Bronze Ceiling Fan with 52-Inch Contractors Design Cherry Blades and Energ
$129.95 | Bellacor
Oiled Bronze Gilded Ceiling Fan with 52-Inch Contractors Design Teak Blades and
$174.60 | Bellacor
Real Fyre Direct Vent Fireplace Insert with Traditional Fire Screen - AMK309
Hayneedle
Fireclay Butler Large 29.5-inch Kitchen Sink
Overstock.com
Necessories Lakeland Seat Wall - 4200050
$799.00 | Hayneedle
Contractor 52-Inch Ceiling Fan in Brushed Steel with Etched Opal Glass and Four
$115.95 | Bellacor
WS Bath Collections Epoca White 66 Inch Slipper Acrylic Clawfoot Tub - EPOCA WHI
Hayneedle
Landmann Heatwave Outdoor Fireplace - 28008
$123.98 | Hayneedle
© 2015 Houzz Inc. Houzz® The new way to design your home™