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Is My Contractor Overcharging Me? - Comments

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Bob Harris (not verified) /

We never give an itemized estimate/proposal. We do however give a very good description of everything we are proposing to furnish/supply to the Owners for a given project. Never do we give the hourly rate we pay an employee, the cost of any materials or other expenses. Most Customers in our area seem to think that Construction Workers should never be paid more than $12 to $14 per hour $15 is out landish. They think Contractors should not charge more than actual cost of any materials. In other words they believe a Contractor should be happy with 20% in addition to actual materials and labor cost. Yes we do have some very good customers in the area but few and far between. A customer will take an itemized list and count the studs, go to Lowe's and check the prices. They will record time for the workers. Time spent at a supply source does not count. DO NOT PROVIDE ONE for them unless you are paid for it, then you only get paid for a material & labor list which they will use to hire the pick-up truck contractor who in most cases couldn't do a real estimate if he had to.

mark broughton (not verified) /

I run my homebuilding business with no employees. Yes, we are small. We build eight to ten homes a year. Your talk of minimum 50% mark-ups is confusing. I get estimates from my subs, which will be all of my costs, and then mark that figure up 20%. Am I missing something. As I said, all of my costs are in the subs. You will of course say what about advertising, etc. I am very interested to see what I may be leaving on the table.

Thank you


Thanks for your question.

The minimum markup of 50% applies to companies that specialize in residential remodeling. Actually what I have said here, in our newsletter, our book Markup and Profit; A Contractor's Guide and the seminars that I do around the US and Canada, is that markup for this type of construction work should range from 1.50 to 1.70 or more. We have many coaching clients and others who markup all of their work 2, 2.50, 3 and more. We have one coaching client right now that over the last 5 months has been using a markup of 2.65 and he is selling 4 of 5 jobs he quotes.

Contractors who do just one or two trades, I.e. electrical, plumbing, concrete, roofing, siding, etc, need to use a markup of a minimum of 1.35 times cost and that group can expect to use a range of 1.35 to 1.50 and higher. Many electrical contractors use a markup of 1.75 to 2 times cost as do plumbers. HVAC contractors are typically at 2.5, 2.75, 3 and higher.

Those building new homes should use an absolute minimum markup of 1.26 times cost and this group will use a markup of 1.26 to 1.40 and up. More and more new home builders are using a markup of 1.30 and higher, finally realizing that a markup under 1.26 (I.e...1.10, 1.15 and 1.2) is a certain path to debt and eventual bankruptcy.

If you have set up your accounting according to standard industry accounting practices, your overhead will be about the same as other companies that build new homes. Small home builders will typically average 18% to 28% overhead. I believe there has been way too much emphasis placed on builders reporting overhead numbers in the 4% to 8% range. This is nonsense as those builders are very often using smoke and mirror tricks to keep that number artificially low. A good example are companies that don't include the owner's salary in their overhead numbers or try to take other overhead expenses (like payroll preparation, mobile phones, and again, owner's salary) and call them job cost.

If a contractor, any contractor, is smart, they come up with accurate numbers of what it costs them to do business. They then calculate their markup or their margins needed to collect that overhead and an additional 8% for profit needed to stay in business. Your emphasis should be on making money, not playing games with your numbers.

One last thought. Customers typically will list price 6, 7 or 8 in order of importance when they list the criteria of things that are most important to them when they buy. Price is almost always a bigger issue in the minds of the contractors than it is in the mind of the customer.

If you want a more detailed explanation, then I recommend that you go to our web site at: and get the book Markup and Profit; A Contractor's Guide.


mc (not verified) /

all this goes out the window if you are gouging your cutomers and they can't afford to pay. Most people don't make 15 or $20 an hour so they don't feel thay should be paying it to someone else. You must all work for rich people. I just had a remodeling company take 36 hrs with 2 guys to patch 2 holes and skim a wall that had some glue stains (not even the glue, just stains) to prepare to paint. (the room size is 8x 10 and they only had to do one side!! ) oh yes and they scraped the ceiling as it had some old texture on it. It should have taken 1 guy maybe 4 to 6 hrs. they sent me a bill for over $900 dollars. I am sending it back telling them it's outrageous! probably worth only half what they are charging if that. In this economy you should be grateful for what you can get not trying to gouge customers. is my contractor overcharging me ?? Judging from the posts on this forum -YES!!!

KB (not verified) /

I have to agree with mc on this. Contractor are out to rip off the unexpecting consumer. In the end, the one's that question the work are the one's who get a fair price. Has anyone here taken an accounting course. People want a break down of their prices. Of course you don't want your customers finding out they are paying $50 for a $10 because they will go somewhere else. Get real, contractors are a gip and should be enforce to have fair accounting practices which include breaking down labor, material, parts, and drive time. Granted you shouldn't have to advise your markup, but you are give misleading information with only a total.

I had 1 gallon of water pumped from my crawl space and a boot flashing replaced on my roof which in total took 1 hour of labor. I received labor of $67 hour and the flashing $20 for material. I later received a bill for $350. When asked for a breakdown and explaination of charges, the company was still vague and kept changing billing items. In the end, I took it to the Better Business Bureau and that corrected the problem quickly. The sad part, this company was even accredited by the BBB.

Contractors should be castrated in the sense they should no longer long to run an unfair business to even worsen the economy. :)

You know I have been on all sides personaly of this conversation from having work done to my house as working as a trademen to runing a comanay currently. And as for MC post it was excessive for the work that was charged out like that out by the hour but it works out to 25.00/h which in my eyes is an great price to have some one come in and do the work. However the time they took is abusurd. But Im doing a simalar job and the bill went out for 650.00 it honestly took my workers 7 hours to complete the job. So your thinking thats 93.00 an hour ITS NOT. This is how this goes I get a phone call from a client I go there and qoute the job typicly i can look at somthing like this and be out in 10 15 mins an have the same price but I have to sell myself to the client and on avg thats an hour on a small job because they usualy have lots of questions. Then I drive back to the office do the qoute an call the person to do the job for me that I can trust not a guy with a truck and a hammer a professional. They pick up material and oh they leave there main job taping and texutring all day so theres set up and take down on both sides 3 hours . They do the job I go get the check from the client i pay my trade do a final invoce 1 Hour. now that that jobs complete it took 12 h so now were down to 55 h sounds great right still more to go. How do you think that client found me to do the job costs money to for ads, and trust me its slow right now so we advertize alot more. Then my operating costs phone, internet, Liability Insurance ect. Now this job went fine what if i tryed out a new taper and he did a bad job and now im obligited to fix it because he wont so have to do some steps over again and I dont have a happy client. I dont have this problem that often but it happens as your trying to grow your company. And most importantly if its slow trades make no money 0, so its not your 9-5 40h week gurrenteed paycheck so that number avg lower. So anyone tell me if im wrong that trades are fairly paid, if you work for 60 h and work toltal of 15 hours in a week for that work week its only 15/h. But when its good its good its feast and fammime like relotors or other salespeople.

Corey (not verified) /


What you said in your post is contradictive. If they billed you for 36 hours total, then that is $25 which is a steal for drywall. The going rate where we are is $35 per hour with a 5 hour minimum for drywall repairs. (that is what I pay as a general contractor). Keep in mind, that 36 hours is two full days of work for two men. If it did take them that long they are either very slow (which would explain the cheap labor rate) or your description of the work is incorrect. Just because you think it should only take 4-6 hours for one man doesn't mean that you are correct. If that is all it would take, why not just do it yourself after work? If you know that it only took them 6 hours, then you obviously were overbilled, and you can talk to them about it. However, you can avoid all of this trouble by getting lump sump bids prior to the work being completed and then paying what you agreed to.


I'm not sure how many hours the job took, but if the labor price was quoted at $67 per hour, it looks like you were charged a 4 hour minimum rate plus materials. That is standard practice as small jobs are not very profitable due to set up / take down time, travel time, sales time, accounting time, etc. Every company I know charges a 4 hour minimum. If you don't like the hourly rates, just ask multiple contractors to give you a lump sum price and compare the total price before having the work completed. Don't complain after the fact! Did they take time out of their day to fix your problem? For $350? If it only would take a few hours (both MC and KB) and you don't want to pay anything for it, then why not just do it yourself and save everyone the hassle? If someone called you and asked you to drop everything that you were doing and come and fix their problem, spending your entire day (labor time, accounting, sales, & travel time) and then have to deal with the hassle of getting paid by someone that questions your ethics? All for $350? This is exactly why we don't do small jobs and / or time and material jobs. We tell people upfront what the price is going to be and they either accept or not.

KB & MC,
I would say that many contractors are much more transparent than say doctors. How many times have you gone to the doctor and have no idea what it will cost. Do they tell you anywhere what it will cost? Do you have any power to select services based on price? What about an attorney? They will tell you their hourly rate, but they will bill you for every minute that they are even "thinking" about your case. There are some contractors that you may feel are gouging the customers, but the real gouging is from low-ball pick-up truck contractors that drop out of business after a few months or years and create a false impression with the public as to the real costs of construction.

As a customer, you should be concerned with getting the project completed correctly, in a professional manner, by a company that charges the correct amount to cover the job costs, their overhead, and a reasonable profit. Just because someone charges 20%, 30%, 40%, 50%, or whatever in markup, doesn't mean that they are making that much. Check out the major remodeling publications and you will find that most reputable companies that will still be around to service warranty needs is only making 4-10% in actual net profit. That is the same as any reputable company in the US. The low-ball contractors that are distorting the perception of the marketplace are actually making a negative net profit, and will continue to do so until they go out of business. That is unless the live with their mother and only work for beer money. Trust me, there are plenty of those as well.

As an example, we recently had a customer that we had worked with for over three months designing their screened porch and deck, completing all of the due diligence, and found out that they needed to get a variance from the county for the porch. I told them that I would do my best to get the variance but that it was ultimately up to the county. Then two days later, the customer called me and informed me that "I was to expensive". I then went and investigated and found out that they had gone with a low-baller that was a whopping $200 lower than my price! However this person started building right away and promised the homeowner that the screened porch would be no problem. He got started right away and the homeowner was happy. That is until the client noticed the large pile of trash piling up on their lawn. When the HOA sent them a $100 fine for it they complained to the builder who told them that he would get rid of it but that he couldn't pay for a dumpster because he had given the "a real cheap price". The builder the took all of the trash and dumped it in the dumpster of a nearby house being built by a large homebuilding company. The homeowner then got a nasty letter and a $100 bill from the large builder for dumping trash in their dumpster. (there were shipping invoices on the trash that had their address on it). Then about halfway through the project, the county building inspector showed up as he was doing an inspection nearby. It turned out that the contractor hadn't applied for the proper permits so the county shut the project down. Then it was found out that no variance application had ever been received, but the new porch was over the building restriction line. The contractor abandoned the project when they saw the work that would be involved in getting the project completed. Now the homeowner is not happy. The homeowner then filed a claim against the contractors bond with the county for $25,000. The county honored the bond, and then the bond company then went after the contractor, who not having that kind of money, went swiftly out of business, leaving all of his past clients that he had promised a "Lifetime Guarantee", without a warranty. Then the homeowner applied for the variance which was denied. They were told to tear it down. Now they are suing the county which is only costing them more money and stress. All of this to save $200! You always get what you pay for. That doesn't mean that you should go with the most expensive, but that there are many factors that should drive your decision as to who to hire, price being the least of them.

This blog is made up of legitimate contractor trying to discuss how to stay in business so as to continue to provide quality service. To insinuate that these legitimate business owners, who employ numerous individuals, are somehow damaging the economy by charging what is needed to stay in business is the most absurd idea I have heard of. How many people do you employ? What are you doing to help the economy?

You should be ashamed of yourself for stating: "Contractors should be castrated in the sense they should no longer long to run an unfair business to even worsen the economy." and you have no business posting on a legitimate business coaching blog. Keep your comments to your Myspace page!

MSF (not verified) /

I have to say from a contractor's point of few this makes a lot of sense. People don't understand the cost of doing business. Think of it this way. A contractor pays all of the same bills that the customer pays. (mortgage, vehicle payment, heating, electric...etc.) and in addition to that we have to pay all of our business expenses, (Shop costs, ex: elec., heating..etc., employee wages, equipment, material, the list goes on and on and on. even things you couldn't think of...also! self employed individuals pay a higher tax percentage on their income because there is no employer contributing along with them!!!!!!!! So THINK! people before you make up your mind that contractors are "gouging" you!!!!!!

MSF (not verified) /

I meant to write "point of view" but you get the point, I hope?

PJ (not verified) /

Home contractors and the way they do business is a bunch of BS. No wonder so many people have negatives of your industry.

Here's something simple to try, instead of all this baloney 20% this and 30% that, why don't companies just instead lump everything into an hourly labor rate and whatever the cost of the materials? Real simple huh? That's how I itemize my invoices to my customers for my IT business. If they want a breakout of the the costs in the hourly rate, I just tell them it includes everything but the materials. If they question the rate, I just point them to similar businesses with similar rates. End of story. The customer doesn't feel cheated and knows what they are getting.

I just tried to get an itemized invoice from my home window installers and for the life of me, they just flat out refused to give it me, citing "proprietary" information. Yea ok. I already decided to hire you and paid 1/3 down, so I'm not going to run to another installer even if your price was higher than others. I just wanted the invoice for tax purposes. I even told them they could make up whatever numbers they wanted, but just to itemize it. They still flat out refused.

You know what "proprietary" in your industry means? It means that it gives you the options to play around with the numbers to justify whatever you charge the customers. Please, I hear contractors say they don't give out this info because it's no one's business and that it just gives customers more things to argue with. That is BS. I tell my customers what I exactly charge and the materials involved and the services that come with it. If they find it cheaper elsewhere then so be it. My industry is transparent and customers can easily see the costs of items everywhere they go.

The home improvement industry seems to love playing games with customers, ie not breaking out costs, etc. In the end it just hurts the good contractors as well as the customers since it allows shady businesses to thrive.

rudy (not verified) /

What a bunch of baloney.

Most contractors overcharge for their work. The estimates given are a joke. Take siding for example. Why shouldn't the customer know what the cost of the materials are? You mean to tell me that they have the right to jack up the cost of the materials when the consumer is paying for them? Siding is probably the biggest ponzi scheme going. Many of the companies that don't sell the siding to the home depots of the world sell it only directly to the contractors which allows them to mark up the costs of the materials. The homeowner is paying for these materials and the contractor has them delivered to the home. There is no warehouse that they store them in and they do not have for the most part a retail location. True there are some who have showrooms but I would stay away from them only because they usually will charge even more to the consumer for their overhead. It would seem to me that many siding contractors at least in my neck of the woods in NY are charging a mark-up of 20% over and above the materials. This is just absolutely ridiculous. None of the siding contractors are willing to even indicate the measurements of your house in fear that the consumer is smart enough to find out the number of squares needed to side their own house and with a little investigating they probably can call enough building supply companies and get an actual psf cost of the siding to be used. It is truly amazing what these guys think their services are worth and the gall that they have in charging such a huge mark-up over and above the cost of the siding. The homeowner should only have to pay for labor and the material costs should not be hidden from the consumer. In my line of work the customer knows exactly what they are paying for the services I provide and they have the actual factory costs of the product which in turn allows them to make a better educated decision without the frustration of knowing that the siding contractors are ripping them off.

Christopher (not verified) /

Here's the deal. If you think one contractor's estimate is too high, then get another estimate. Or 3 more estimates, or 50 more estimates and go with the cheapest one.

I guess that most estimates will be in the same price range. Some may be really high, and a few might be really low. I would be scared on the ones that are significantly lower--perhaps they are not licensed or don't have liability insurance, or maybe they will take your downpayment and skip town without doing the work, or perhaps the people they are hiring to do the work don't know what they are doing and will damage your house or install things incorrectly.

Remember what this markup pays for: fuel, insurance, licenses, vehicle payments and insurance, rent for office space, tools, equipment, phone, etc.

And if you think all the estimates are too high, then do the job yourself. But you probably can't do it yourself--that's why you are hiring someone to do it.

(No, I am not in the industry. I am a do-it-yourselfer who sometimes needs to hire someone for things I can't do myself.)

Bor Con (not verified) /

Well, I have been wrestling with thsi same issue for over 20 years. I generally charge 10% for overhead and 20% for profit. BUT I dont think that. Is enough. I can figure out what my company fixed costs for the year will be, but not insurance and equiopment and fuel costs. I have friends in the industry that charge 33% , 50% and some that actually use the 2.2 method. Which is taking actual job coast and multiplying by 2.2 for costs. I as a contractor also wish that there were industry standards for markup, which would level the playing field. BUT we all have different overhead costs. I'm just trying to make a living like everyone else. I would say that 90% of contractors out there just barely make a decent living. The other 10% are seriously gouging people and make us all lookl bad.

I just had our building's HVAC contractor replace a condensor fan motor in one of our units. When I asked him for the cost of the motor, He said he was charging me $903.00 for the motor alone, without labor. as a reality check I looked the motor up on the Internet and got prices from 4 distributors around the country. The lowest I found was $253.00 the highest was $340.00. I can understand that there should be a markup as he is paying for it and reselling it to me, but to markup a motor by over $500.00 is just not right!

Lars (not verified) /

My husband and I are a young couple- just bought our first home, which was built in the 20's. We took out a loan for siding, windows, doors and insulation (we'll finally be able to turn up the heat past 57 degrees this winter without heating the outside). Our contractor gave us a quote on everything except the insulation. We thought we had an insulator already lined up. When that person backed-out, we asked our contractor (who we really trusted) to recommend someone. He called AllSide, who gave him a recommendation. That insulator came out, measured then gave our contractor a quote. The quote our contractor gave us was $3,900. This sounded reasonable, so we said OK. When the insulator was at our home, doing the job, I mentioned that I was so glad he could come out and that his price was reasonable at $3900. He looked at me, asked me to repeat myself. I did and he looked surprised. I found out that the insulator's cost to the contractor was ONLY $2600. From reading this website, it seems like it is not uncommon to charge 20%, HOWEVER, this is a 50% MARKUP! My contractor tried to explain to me that all businesses need to make profit. I'm young, not stupid, and understand this. However, all he did was make a phone call. For this he charges $1300?! PLEASE help me understand this. Am I being unreasonable? Thank you for ANY feedback!!!

mickey (not verified) /

I am a licensed and insured basement finishing a remodeling contractor from MN. I bid jobs with exact subcontractor and material costs itemizing everything. I then charge 15% of the total project as the "general contractor fee" this includes permits, disposal fees, scheduling, organizing and overseeing the entire project. I also perform the carpentry and bill based at $40-$50.00 per hour. Everything is itemized such as Framing, trim, etc... I hear all the time from clients that they hired me because the new what they were buying. I also still have some issues with some clients not understanding what the General Fee is for. They can't see all the behind the scene work that needs to be done that is not covered by onsite labor. For a three month construction project I can be "working" on the project for 5 or 6 months.

JTAT (not verified) /

I constantly hear two arguments from the general public about residential construction and remodeling. First and foremost I hear about the abundance of terrible tradesmen and general contractors, and how there is "no one building like they used to". I tend to agree on the overwhelming number of inexperienced and under qualified trades, but what property owners are missing is that they are the catalyst which has helped spawn this breed of craftsmen. Every time a homeowner accepts a low bid from a "trunk-slammer", doesnt check references, doesn't protect themselves with appropriate contracts, and then accepts "ok" work, has just allowed that sub par contractor to continue in the manner which he always has, while opening the door for 2 or 3 more just like him. This brings me to the second argument that i hear, which is the basis for this discussion, that a contractor is ripping them off. From my argument above, you should now realize that these two things are strongly connected, in that you get what you pay for! First, no one has ever ripped you off! Only you have allowed someone to take advantage of you, and because you didnt do your homework prior to contracting, you have also allowed that person to stay afloat and target someone else. The easiest way to protect yourself is to hire an owners representitive, likely the architect who drew your plans. For the most part, they know enough about the business to steer you in the right direction. If doing this is not cost effective, there is enough info out there via manuals, and the internet to draw some pretty useful conclusions. Next, get multiple bids ( 4-5) check references and history of each, and throw out the one ones that dont pan out, or that make you feel uneasy. Assuming that you still have at least 4 remaining, throw out low and high bids, and draw straws for the other 2. Keep in mind that if any bid is more than 5- 10% from the median either way they have made an error of some sort, and if you want this contractor in the mix, you should call them and without giving the numbers of the others(shopping bids is not ok) you should ask them to revisit their estimate and compare apples to apples. All estimates should have detailed inclusions and exclusions, and in most cases allowances for unselected finishes. Itemizing is unnecessary, except for the allowances, and opens the door later for some contractors to argue that certain things cost more than originally quoted, because of something you did. Please remember that running a ligit qualified business isnt cheap. For example, just because you think the $40 per hour for paint labor is expensive, doesnt mean that you are being ripped off. It is likely that 4-5 of that hourly rate is pure profit, and that the majority id to pay the wage, cover overhead, and cover tax burden.

jeff (not verified) /

I am a general contractor in British Columbia,Canada. I am shaking my head at some of the comments here. I have two comments to make.
1)A meal in a fast food restaurant is around $10.....the actual cost of this crap they call food(burger,fries and drink)is less than $2. Why doesn't anyone complain about that!
2) I get calls from home owners everyday to come fix their mistakes. I am in peoples homes everyday looking at problems created by the owners not doing proper maintenance. I have seen hundreds of homes damaged because owners go with the lowest price. I am amazed that people never check references, ask for proof of insurance etc. or try to do the work themselves and then expect me to fix it for next to nothing. I have been asked to take care of pets, children etc, while i am trying to work....these are the same people that think i charge too much.

For most people a home is the single largest investment of their life.......why not treat it that way?

JTAT (not verified) /

Mickey, I agree with you that some like itemizing, but it has a down side. I have done this on many occassions, and also on many occassions have had over zealous homeowners on site counting and checking material. This generally isnt an issue as I will happily give back money if something changes and estimates ended up being higher than what was actually required, but they never offer to pay for what you under estimated. The bigger issue is that the awkward conversation explaining to a homeowner that there was a waste factor, or that they misunderstood the estimate, just leads to mistrust and tension. As you know, an estimate is just that, and when you are estimating all or multiple scopes you know you will miss on something, but you also know more times than not you wil make it up somewhere else, so its a wash, but that's difficult at best for a homeowner to grasp. This is why I argue that itemization is not for me. I list in detail all inclusions and exclusions, and provide amounts for exclusions to give a homeowner something to reference for changes they might want. Almost nothing else in this country comes with an exact cost and markup, and if it did, consumers would be less likely to buy because they wouldnt understand the markup. If anyone knew that a happy meal actually costs .27 cents we wouldnt understand why to make a profit, they must charge 3.99.. just an example, and just my opinion.

Leo (not verified) /

I suggest next time you eat a $25 steak in a restaurant - ask them for an itemized cost. Or better yet - check the price of the steak at the grocery store :)

jane (not verified) /

I don't know if anyone at all looks at this site or checks new posts but I have a question and nowhere to ask it.
My plumber gave me an estimate of $1000.00 for a job. The bill comes in and it's over $2800.00. Not only that but the items on the list of materials were marked up between 3 and 4 hundred percent! When I called to question this they said they mark up 55% that is their policy. I call it all robbery and gouging. There is a big difference between steak and plumbing. The price you pay for steak is for the labor and other supplies that are used to cook it. This business of marking up so much is like the chef getting a $5.00 steak at the store and remarking it $20.00 before he has even touched it, then charging you for cooking it and the seasoning. I am fuming!
thanks for listening, if anyone is.

Michael Stone /


If you wish to send me a private E-mail, we can set a time for a short phone call on how to deal with this issue. Obviously the sooner the better.


David E Joubert (not verified) /

When a contractor gives a quote on what it will cost to paint your home,does that include the supplies? Do we have to pay out of pocket for the supplies?

Michael Stone /


It all depends on what the contractor's proposal says. Any quote you get (verbal) should include everything. Then, if you choose that contractor to do your job (and I hope you do not pick your contractor based on price) they should provide you with a clearly written scope of work and a lump sum payment for that agreement. Do not get involved in Cost Plus jobs or Time and Material jobs. Get a lump sum or fixed price contract. Expect to make a down payment and progress payments for the work. This, again, should all be spelled out in your agreement. If the agreement they give you is not clear or complete, make them take it back and do it so there are no questions in your mind about exactly what you are getting for the price quoted. If the contractor will not provide a clearly written agreement that you understand, then find another contractor.


Bridget (not verified) /

I hired a contractor to redo a small bathroom at our house. He charged $25,000 for the bathroom and he then replaced a ceiling in my den for $4,000. I asked if he would paint my kitchen and he agreed. I made the mistake of not asking for a price ahead of time. He charged me $13,000 to paint my kitchen that cost me $4,000 last time I had it painted. I paid for part of this but not the whole amount because he is ripping me off. He wants to put a lien on my house do I have any recourse? He also is charging $4,000 to repaint a bay window? His claim is it would have cost $15,000 to replace it so I am getting a deal??? I have had a lot of work done at my home and never had any problems like this in the past. He seems so dishonest. I have paid him $50,000 to date. He wants another $13,000 for the painting. What can I do??

Michael Stone /


Here is some questions you are going to be asked, at some point if you take this to court or arbitration:

How big is your kitchen and how long ago did you have it painted? The price of painting does not remain the same any more than the price of gasoline.

Why did you not insist on a clearly defined contract before you let this person begin the painting? You are as much responsible for requiring a contract as he is for writing it.

When you say he is "ripping you off", on what are you basing that statement? Do you know the prices of various construction related projects? Are you an estimator? How big is your kitchen
and how much prep work was involved before he began the actual painting. You can't deal with these issues from emotion. You need to gather facts and evidence to build your case.

What you can do is one of three things, part depending on where you live and your state laws.

1) You can hire an independent estimator that is knowledgeable in construction and knows how to estimate a job and have him/her negotiate with this guy to get a price fixed for this job. They are also called independent adjusters.

2) You can contact the BBB and ask for an arbitration. Make sure you insist on an arbitrator that knows construction and has dealt with these type issues before. If they don't know and understand construction, don't accept them as an arbitrator.

3) You can hire an attorney to represent you and have him deal with this guy.

I have a hard time with this issue as you don't give many details on which to base an opinion. I am an arbitrator for the BBB and if you brought this case to me, you would have a lot of home work to do before the hearing.

My advice to you and all others is make sure the "contractor" you are going to hire to do your work knows and understands the legal aspects of this business, writes a good, detailed contract with a fixed price on it and a payment schedule spaced out over the life of the job. You should also have start and completion dates included and what will happen if you have a disagreement like the one discussed here. When you don't do your homework and hire a professional businessman/contractor to do your job, then you have no one but yourself to blame when problems come up.

One last thing, never, ever hire a contractor based on price. Those that hire their contractor based on the "lowest bid" deserve exactly what they get.


John (not verified) /

We have a showroom and we sell products (countertops, cabinets, flooring) as well as install if needed. We do a complete breakdown and only apply sales tax materials-cabinets, countertops, flooring. We are located in MA should we itemize everything on our estimates or if we need to do the breakdown to charge sales tax on material since we are tax exempt. People have commented that our sales tax is too low? But I thought our accountant said we don't apply sales tax to labor.

shorty (not verified) /


I am going on a 6 month project that originally was to be a 6 week project. We just bought our first home. Got a few bids and picked a contractor that seemed reputable.

We had a project manager who worked with us. Unfortunately, we found a lot of unexpected problems that were not part of our original contract. Now every time an issue came up I would ask the manager, how is this going to affect my budget? And he would reply don't worry about it your budget will cover it or we will give you a change order. This was back in October and I hadn't seen a single change order until yesterday and now they are saying I owe 50% more then when they budget for and the house still is no where near done. The new budget they are trying to give me is almost double the original contract.

How is this even fair or right? I feel totally ripped off and stuck because the work is no where near complete, people haven't been showing up to work for 2 weeks and now they want an absurd amount of money in order to get people working again. Oh and did I mention they hadn't been paying the subs and one put a pre-lien on the house and now I'm paying the sub and the GC.

What are my rights as a consumer?

michael sendrowicz (not verified) /

In my opinion, a change order is worthless once the work has already been done. Change orders typically change the scope of work, and expresses the effect those changes will have in terms of schedule (time) and budget (money).

Signing the change order accepts those changes, and modifies your contract price and schedule accordingly.

Because we cannot see the verbiage delineated in your original contract, it's hard to analyze this much farther.

My suggestion is to contact an attorney in your area as soon as possible, and get some legal advice. I would do this BEFORE YOU MADE ANY MORE PAYMENTS.

In my area, the act of paying a subcontractor while your contractor is still on the job may make YOU the General Contractor. It is really in your best interest to get some legal advice before continuing this relationship.

Good luck!


Jeff (not verified) /

Can someone educate me why the price of a job is based on the cost of the materials ? (i.e. % mark up)

For instance if one toilet cost $100 and another is $400...and the contractor charges %50 mark up...

I have a hard time understanding that I will pay him $50 for toilet a) vs $200 for toilet b). The installation is the same. One would argue that the more expensive toilet is built better and might even be easier to install.

bugged homeowner (not verified) /

To all you "non bubba" contractors. I think the problem you don't seem to realize and are becoming offended about with home owners is that they don't want to be ripped off. I'm in the middle of a bath reno right now and I've had to have each thing redone at least once. I have a contractor with logo vans, business cards, showrooms, good references you name it. I didn't go with the lower quoted "bubba" but I seem to be getting the same job! This is what homeowners fear. My father does kitchen design out in California and he confirms that any reputable "non bubba" should be able to give you a break down and that it's fair to ask for one. So stop being so offended that someone might be undervaluing your work and get that chip off your shoulder it's probably coming through and ultimately end up losing you clients.

michael sendrowicz (not verified) /


Just a couple of things you may wish to keep in mind, and which help you save a bit of money.

As a project manager for a renovation and property maintenance firm, I try to keep a pretty firm hold on the money.

We need to keep a 30% gross margin to keep the lights on. I usually aim for 33%, but it rarely works out like you plan. to get a 33 1/3% gross margin, you need a 50% mark up. Why? Because profit is a function of PRICE, not COST. If I purchase something for $100 and mark it up 50%, my price becomes $150. So I make $50 on a $150 sale, which is 33 1/3%.

But that doesn't mean we can't save the clients some money, and keep them on budget. Here's how I try to do it on kitchen remodels

Keeping my gross at 30% is tough. What it means is that any money I put into a job, I need to turn a profit on. I wish this weren't true, but we, like most companies, have a tough enough time at these rates. And that's assuming we keep working. Down time is even worse.

What that means is that if I need to use my money, I need to mark it up, and you, the customer, are paying me for dollars that I invest on your job. Sometimes, this can't be helped. But sometimes, you can avoid having the contractor invest their money.

Appliances are a great example.

Most people like to shop for their own appliances. You will probably go to the store, shop around, compare brands, sizes and quality, and make an informed decision. This is what I need to do for my product selection, and part of what you are paying me for. So if YOU are willing to do it, you don't need to pay me for it. I typically have customers purchase their own appliances, and have the stores install them. This removes me from the loop, and since I am not investing my money, I don't need to mark up those units. The appliance companies have large trucks they deliver in, and will frequently take the old units away for free. Again, this means you won't need to pay me to do it, or for me to dispose of it.

Trim out areas is another place you may be able to save a bit. Hanging your own towel bars, or installing your own window treatments can save you noticeable money.

My only caveats are that if you hire other companies, even appliance installation, that it not occur until we are done with the job.

If you add up the cost of a refrigerator, dishwasher, and range, it can tally up to a pretty significant cost. Unfortunately, I can't spend my companies money unless I can show that I turned a profit on it. If YOU handle those items, you put the savings into your pocket, or can put it into a larger scope of work!

Just a thought,


rico (not verified) /

I liked the steak comment.But i hate to tell you that a chef does charge you $20 for the $5 steak he buys in the store.You all know you get what you pay for!Do your homework and check backgrounds or get ripped.You wouldnt buy a car without checking it out would ya? But then again, from reading some of these posts some, of you would.Oh by the way,I have a bridge to sell if anybody is interested!

Jackie (not verified) /

I am in the process of building a home, and I am also infuriated at some of the bids I have been getting back. I am serving as my own general contractor, so I am avoiding that particular markup. But, I have found that the subcontractors are marking it up instead an equal if not higher amount. We live in a very small town and we are a military family. The contractors here are pricing everyone out of the market. They must hope that the military will raise our BAH so that they can raise their prices yet again! The homes are not built well, and use substandard materials because the code is so lenient here. The military is their only customers, because the average local salary is well under 30,000. Apparently the contractors have seen an opportunity for a profit and are going for it full steam. Meanwhile, the military men and women of the area can't afford it much better than the locals. What exactly is a fair price for framing per square foot? Electrical? Plumbing? Brick? Concrete? I have a rough idea but I would like to know a little more, because I sure feel as though I am being ripped off at this point.

Meghan (not verified) /

We recently had a raw sewage back-up in our basement, and the damage is covered under our homeowner's insurance. However, there is a $5000 cap. Being new to a situation of this type, my husband and I called a family friend, a contractor, to get his "advice" on how we handle this. We also called our insurance to file a claim the morning after the flood happened to get the ball rolling. On Sunday, the family friend came over for coffee to check out the damage. He spent about 5 to 10 minutes checking out the basement, then he stayed for coffee and small talk, nothing to do with the damage below. Our insurance company contacted Servpro and set up an appointment with them to come out Monday and beging the gutting of the basement and the remediation. The family friend contractor cancelled the appointment our insurance company made, then re-scheduled an appointment with the very same company under his name as the contractor in charge. Our family friend came back on Tuesday, for 10 minutes, and no more than that, to look at the basement again. He then sent a tile guy and a carpet guy out to give us estimates. That was the extent of his involvement, a cumulative total of 30 minutes (and that's being generous) on site and just looking, and then three phone calls. We have received no estimates from him or anyone else, and neither has our insurance company, and he called my husband today and said we owe him $800. Can ANYONE tell me if this sounds absolutley insane to them, or if it's just me.

Thanks, Meghan

Jackie - I'll admit, I have a soft spot for the military. My father served, my brother and I both served, my daughter is in the Army right now. But there are a few things to consider here.

When a general contractor runs a job, they have a relationship with their subs and the subs know what to expect from the general. They know when they'll get paid, they know the general knows how to schedule them efficiently, etc. When you hire a sub directly, that sub doesn't know you or what to expect. It is normal for a sub to charge a higher price when they are working directly with a homeowner than when they are working with a general. You can't expect wholesale prices when you are buying retail.

There isn't any reasonable price per square foot for anything. The cost of materials and labor is different in every city/county/state, and every contractor has different overhead expenses that need to be covered. And you don't want to hire anyone because they give you the best price - you want the best job. You want a contractor who will still be in business in a year if there are problems. If your focus is low price, you'll get a substandard home and exactly what you paid for.


Meghan - Do you have a contract or agreement with family friend? If not, you might not owe him $800. Your attorney would be the best person to ask advice on that issue.

But I have to ask a few questions. Why did you call him, what did you want him to do? Does he live across the street, or across town? If you'd broken your leg, you wouldn't have expected a doctor family friend to look at it for free. If you'd been served legal papers, you wouldn't have expected an attorney family friend to stop by and give free legal advice. Your family friend could have given you basic advice over the phone, for free (and your doctor or attorney won't even do that). But if the family friend had enough information to cancel an insurance company appt, and you let him do it, I'm suspicious that there might have been more to the Sunday morning or Tuesday appts than meets the eye.

Just remember, contractors have families to feed, clothe and house just as you do. They spend years getting their knowledge and experience and shouldn't be asked to give it away for free. On the other hand, there is no excuse for not following good business practices and writing a contract for the work that needs to be done.


Michael Stone /

Tom T: Dec. 17 Post

Very well said Tom. I could not do any better if I tried.

Thanks for your post.


Jackie (not verified) /

Dear Michael,
I understand that particular point, about contractors working better with a general than with the public. But, for example, I know that the local price for framing runs anywhere from 3-4 a square foot. But, the guy who gave me a bid is charging 5.50. Electrical runs approximately 4 a square foot, but the guy I got a bid from is expecting close to 6 a square foot. I am sorry, but I am no sucker. I have a general contractor working with me, but not for me, who is looking over my bids and letting me know the fair price of the work. He said all of the prices are WAY out of line. He will not let me hire him, either, because he says I can do it alone with some minor guidance from him. Say, for example, that the local stores decided to price a gallon of milk at 30.00. Would you pay? It is a gross overcharge, and there would be outrage. It is no different with contractors. Friends of mine in Chicago use conduit instead of this cheap romex, and the prices are STILL lower. It is pathetic.

Tom T (not verified) /

"Mrs. McG",

First of all I would like to applaud you and thank you for adding to this conversation. From reading and rereading your post a few times there are a few things I have observed:

1)You are obviously a very intelligent, frugal, and hard working woman who is trying or has tried to get the most for her money. That is quite respectable, and after reading that you saved for "years" to get your dream kitchen and floors, it is quite admirable as well.

2)From some of the comments you made about contractors, inflated prices, sub-par subs, shoddy work, etc. it seems that you have had a few bad experiences with general and/or sub contractors. I could sense the aggravation and mistrust in your words.

3)You seem to be quite knowledgeable about the construction industry and process due to the fact that you were able to act as your own general contractor on your last remodel. That, my friend, is impressive, and, once again, I applaud you for your efforts.

Now, if I may ask a kindness of you, would you try and hear me out on a few things?

First of all, my comment about "Bubbas" versus professional contractors was meant to be a scenario full of hyperbole, exaggeration, and a little sarcasm. I know there are quite a few "good guys" out there working long hours, doing all the paperwork themselves, barely squeaking by, and driving around in an old pickup truck. Some of those "one man shops" are great, and I've been that guy. The point of the "Bubba" story was really to show that there is a vast difference between the PERCEPTION of who the common construction businessman/worker is and the REALITY of who the professional is.

Just to refocus a bit, the main question and heading of this whole blog article is this, "Is my Contractor Overcharging Me?" As a guy who has been in and around the trades for a long time, and has experience owning two general contracting companies, I feel that I might be able to shine some light on that question...

1)The Fallacy of Fair Market Price-
For starters, there is no "Fair Market Price" and/or "Standard Price" for any particular job or part of a job. Specifically, what I mean by that is, every single contractor or company is going to charge a different price. Why? Because every company or self-employed contractor has different job expenses, overhead, and a self established rate (say 8-15%) for company profit. Those who charge $xx.xx per square foot for, say, tile installation, have either done one of three things- #1 They guessed at a price. #2 They may have "heard" around the way what the going rate is for tile installation is, Or #3 The less likely option, They may have actually sat down and figured out the math and backtracked from their final job price to find out how much they need to charge per square foot in order to cover overhead, job costs, and profit.

2)The Failure Rate Of Construction Companies- That brings me to my second point. There are some construction, remodeling, and general contracting companies out there that only have a goal of being "competitive." Meaning, these companies live and breathe to get jobs based on price. They will always come in lower than the other guy just to get a job. These guys hardly ever consider whether they are covering their overhead and expenses, let alone making a profit. Inevitably these guys will go bankrupt. I know cause I used to try to win jobs by being "competitive." Now I only do fixed price contracts, and stick with a price that is not only fair, but also profitable.

So, according to Michael Stone- The construction consultant responsible for the owner of Construction Programs and Results...and the developer of this here blog...and author of a few great books on running a successful and profitable construction company...there is over a 90% failure rate of construction related companies. THATS RIGHT 90%+!! Why? Because most of these companies are not charging ENOUGH for their services.

If you get a proposal and/or estimate from a company that is way lower than the other "big city contractor" out there or long established company, ask yourself "why?" The real reason is that the little guy is probably just guessing about the numbers, and according to the statistics, he will go broke from not charging enough in about 3-5 years. The truth hurts, but hey, its still the truth!

3)Business Sense- Job costs, Overhead, and Profit
I don't know about any of you reading this, but I don't know too many contractors who are both good with the tools (a.k.a. building a job) and good with the numbers (a.k.a building a business). For example, my next door neighbor, who taught me how to frame houses, could walk a roof like no one's business, set trusses, and build a custom home like no one I know or have known. Yet, this guy couldn't, and still can't, seem to do much more than break even on some of his greatest work.

What that means is that more contractors and, in particular, construction company owners, need to do is put the tools down and pick up some books and a calculator.

For everyone's sake and for the sake of the construction industry at large, every construction company owner, salesman, and/or executive needs to know to the 1/10th of a cent how much their overhead is, how much profit they are making, how much costs are in each of their jobs, and what their proper markup is. Then and only then, will each man or woman in charge of their construction company know for sure that they are charging just the right amount. The right amount...what's that? Enough to cover overhead, expenses, job costs, and a reasonable (8-15%) company profit. Or, in other words, just enough to pay the bills, pay the employees and subs, and pay the company.

In summation, to the question "Is my Contractor Overcharging Me?" If he is a pro, he's charging you exactly what he should- covering overhead, expenses, job costs, and profit.

Mrs. Mcg (not verified) /

I understand how you gentlemen feel as I have worked in a professional field and feel my expertise, training, and education is worth much more than "Bertha"
My husband and I saved for some 25 years to get our dream kitchen and floors and unfortunately, we can't make the extra 6 or 7 thousand dollars the big city contractor quoted appear out of thin air. We have to spend a lot time weeding through the beer belly bubbas to find the few hard working gems who quote, not out of inflated egos, but out of a sense of fairness for work performed. Why should a homeowner who has work hard for decades to earn the money to finally have something nice, give it away to contractors who feel superior to the average Joe?
And what about the homeowner who is well educated, performs research on the fair market prices for just about every aspect of work such as laying tile? Should she pay someone five times that amount just because he calls himself a contractor?
And what about the guys contractors hire? Does he make sure his subs are up to par? Does he screen them? Believe me I have hired Professional contractors before only to have him show up with day workers so inexperienced that I had to fire them on the spot. One contractor got his workers from a work release program! I ended up with a main water line buried 8 inches deep! And I had researched this contractor about as well as humanly possible. Unless a contractor is willing to constantly check on his men’s work, stay constantly on top of it, he doesn’t really know how the work is getting done. And from experience I know that most contractors have so many jobs going on at the same time that it is difficult to keep a good eye on everything. They trust their subs to do the job right, but realistically, this just does not always happen.
With our recent remodel, I tried the route of contractors again and tried to take a different approach. I wanted someone to do all the legwork, and take the worry off my hands. But, with the uncertainty of not knowing who I was getting, and let’s face, I don’t know these people, I decided to act as my own contractor, again. Not only did it save me close to $10, 000, I could interview the people actually doing the work, check their background, and talk to other people they have done work for. The only difference, if I chose badly, then that is on my head. However, I have also had contractors whose sub did bad work and they did not take responsibility to fix the problem. If I refuse to pay, they have the right to slap a lien on my home and I have to fight it out in court costing me more of our hard-earned money to prove they caused more harm than good, and the courts traditionally side with the contractors. So it basically winds up the same either way, there are no guarantees either way. We do not have to hire “Bubbas” to do our work. You just have to know the right questions to ask.

Michael Stone /


Bonus for what? He lost the appliances, (and that takes some doing)and now he wants more bonus? He was not entitled to any bonus in the first place. That is BS with a capitol B.

You and I contract to do a job. I do the job, you pay me, we are even. I don't owe you, you don't owe me.

It is customary to carry insurance when you hire out as a project manager so I have to ask, did he do that? If anything, he should see to it that his insurance company pays for the appliances.


Tom T. - Great post! I'd laugh if it weren't so true. I wish it were as easy to make a potential client understand this as handing them a copy of your post. It's a delicate balance; educating your potential client with enough information to allow them to make an informed decision without speaking poorly of others. (Even if it is deserved)
You forgot one conclusion that almost always arises at the end of this scenario: The client has to call a reputable contractor to come in and repair all of “Bubba’s” inadequate work because “Bubba” was paid in full early because of some woe is me story about needing to make a rent payment. I can hear it now: “The number I had for him has been disconnected and there wasn’t any forwarding information!”
…………….As I stand and listen intently in feigned disbelief. “Sure we can take care of that for you. Let me run out to my truck and get my notebook so I can get you an estimate.”

Michele (not verified) /

Forgive me if someone already said this; I didn't have time to read all the comments. Why does no one expect other laborers/professionals to give them detailed estimates? If I ask my auto mechanic to fix my brakes, he's going to tell me the cost is $100. He doesn't say, "so, the pads are $25, but I have to add overhead and I'm figuring that at 25% blah blah blah." No, he's going to say $100. If I ask an attorney to represent me, do you think I'll get a breakdown of what he's charging for overhead & profit? What about someone who wants to charge me $40 to mow my yard? Should I ask for a detailed estimate so I can make sure he's not overcharging me for the gas he uses in his mower? I can understand why people would want to make sure that they are getting what they pay for. But they also need to understand that part of what they are paying for is the contractor's experience, her knowledge, and her relationships that she has established with the subs. Quality costs money!

Michael Stone /


Thanks for your post. The information in the Markup and Profit book works the world over. We have contractors in the US, Canada, Mexico and 18 other countries around the world that use our book. Business management is business management and it doesn't make any difference what or where your location is.

And, you are right, there is no reason for any contractor anywhere to feel guilty about what they charge for their work. Contractors have the same right as any other business to make a profit on the work that they do.


Eric (not verified) /

I read through most of the comments and I didn't see this mentioned....opportunity cost. I own a small remodeling company which specializes in residential maintenance and remodeling for Estate Sales. I have a MBA in Finance, licensed Realtor, licensed Builder,BBB member etc.

90% of my work is all done by an upfront bid. Time and material jobs are actual costs of labor, materials, and subs, plus 30%. I own a debt free business, not by choice, a little debt would be nice because I could use my equity to but a few more rental homes. Every dollar invested in my company is mine. My overhead costs on average are 15% based on a five year average, and I need a 15% return on my investment (money to operate), to make it worth while over having a desk job and investing my money elsewhere.This year 2011, I ended up with a 12% return on my money. Less than I needed, but Ill keep working at it. You see people call every day and just about any time of the time. I love the work, but not the New Years Eve phone calls, or 2 am calls stating someone just broke a window etc. Yes I could shut the phones off, but I wouldn't have a clientele.

Now....a contractor should charge what "they" need to cover actual overhead, and a profit margin to keep them happy, other wise they will cut corners at some point.

Lots of contractors due rip people off, but so do some homeowners. I installed a new roof and the homeowners A/C unit (window model) broke around the same time period. She assumed it must be my fault, which it was not. Long story short it was cheaper to buy a new A/C unit than deal with the bad publicity in the neighborhood. That kind of stuff needs to be allocated for.

Also for those of you who mentioned the final invoice was way higher than quoted and so on, next time call several references for the contractor you are interested in hiring. All of my estimates have disclaimers stating things come up, suppliers have issues which may delay progress adding costs etc, etc, BUT I also verbally explain this to homeowners AND tell them where we are based on the estimate, no surprises.

Contractors out there...I work a lot for investors, higher volume less clients. Has its pros and cons. They are less nit picky about costs, but if something happens to them, you have a big gap to fill. Also you can turn down work, sometimes that is the best thing to do when worried about about a prospect. For me its never been true that lower costs to get a job is better than not working at all. Every time I lower my bid for a job something comes up and I lose out. Now its cheaper to give everyone a partial paid day off and go fishing!

Monika (not verified) /

What a great forum! I too am embarking on a reno that includes a kitchen, a couple of new windows, replace flooring... nothing extravagant, as the floor space, in which the kitchen is about a third of the space is 500 sq.

I have been frustrated beyond belief. I've stated my budget, which everyone says, yes that will get you a great kitchen, etc. I've gotten estimates, worked over a couple of times and each time it was like comparing tapioca to banana leaves. I have been upfront with my what I can afford, which includes $X for appliances (quoted and firm) and the architect designer ($X verbal without any idea what I'm really getting). I'm still at the 'estimate' stage, in spite of all the trades coming by who quoted. The estimate also includes taxes and a 10% contingency fee which does push it over my budget. This whole process has been a nightmare. I keep getting less and less for my dollars and that's not a lot of fun. Last meeting we got very close to an ok, just need to know what the further charges the designer will cost (and what they are for). Now, another person from the company has called, and we have to go over the estimate numbers again. It's like nailing jello to the wall.

I will go one more time to review numbers, but the straw is breaking. Any trust I have is swirling down the drain.

Your information on contracts is excellent.


Hi everyone,
Grateful to be able to join the conversation. I Co-Own a remodeling company in the suburbs of Chicago, IL. called New Creations Construction and Contracting, LLC. My business partner and I have a combined total of over 40 years working in and around the trades.

After reading many of these posts it is obvious to me that there is quite a bit of tension between homeowners and contractors. Or, I should say, there is a lot of tension between homeowners and their PERCEPTION about who the average contractor is- a "Bubba." That's right, I think a lot of people see contractors as just a "Bubba" with little or no education, few skills, and no business sense. Thus, with this perception in place most homeowners probably just assume its safe to think that it's only fair to charge for materials costs and a bare minimum hourly rate.

On the other hand, when a homeowner is approached by a professional contractor he or she is usually stunned by sticker shock when presented with the professional's proposal.

So, in my humble yet heartfelt opinion, there in lies the problem...there is a vast difference between a "Bubba" and a professional contractor.

Let's list them...Bubba doesn't have business cards, advertising, or a website. He gets all his work by word of mouth. Bubba's customers write out checks to him personally or pay him cash only. Why? Cause Bubba certainly doesn't have a business account or pay taxes. Bubba has a truck that leaks oil all over your driveway. The truck has been paid for since '92, so that's not really an overhead expense, except for needing a few quarts of oil a week. Bubba hasn't shaved since the Stoneage, and his uniform consists of hole-filled-knee-warn-jeans, a tattered-paint-stained-t-shirt and a nice-warm-but-worn flannel. Bubba works by himself or with "a helper" sometimes. Bubba does good work at a "great price", but all he really cares about is getting enough beer money to make it through this week and on into the weekend. Oh yeah, and Bubba's boots are about five years old, and will probably leave chunder all over your floors. Bottomline, your contractor, Bubba, is not gonna overcharge you. In fact, he's probably not even barely break even on the job cause he "doesn't have much overhead or expenses. And I just work by the hour anyways." So, is this contractor overcharging you? No way, he's giving you the deal of the century! Or so you think, because when you looked at the professional contractor's proposal it was literally thousands of dollars more expensive...

When, I, the professional contractor showed up to your house I was clean shaven, showered, and wearing my company shirt and coat. I brought a bunch of information for you. I was on time. I took pictures. I took measurements. I asked you what you needed, what your problems were, and how I could help you. I made sure that I listened to you, and took copious notes.

Oh yeah, and before I met with you that day I met with my Administrative Assistant, who helped me go over some things needing my immediate attention...with her help, I renewed my workman's comp, liability, and property damage insurances, I signed employee checks, we went over our projected overhead costs and sales projections, we contacted our accountant with some tax questions, and also sent a few documents to our company attorney concerning some questions we had on appropriate "contract language."

A few days after our meeting, after spending hours of my time providing you with a free estimate, I submitted a proposal to you. After looking over the 11 page proposal for your kitchen remodel, you were "shocked" to see how much more expensive it was than the handwritten-scribbled-jibberish-contract that "Bubba" gave to you.

As a result, a few days later you tell me, when I call, to see how things are going, that you have decided to go with "Bubba." And thus goes another potential customer falling prey to the myth of the "low bid contractor."

What you may have the displeasure of finding out in the near future are the following: "Bubba" doesn't carry insurance. "Bubba" is gonna require way more changes to the original quoted price than you can keep track of. "Bubba" is juggling a few other jobs at the same time and may not show up or be heard from for days. "Bubba" can't tell the difference between a computer monitor and a flat screen tv, and doesn't "do email." Bottomline, you are gonna have problems, problems, problems...

So, is the professional contractor overcharging you? Absolutely not! This guy has a reputable business, a large overhead, job costs, and actually differentiates between a real company profit and beer money. Yet because you, the cautious consumer, was looking for the "best deal" you got stuck dealing with "Bubba" and the professional contractor moved on to do a profitable job with a customer who had previously dealt with "Bubba" and finally saw the truth in the saying, "You pay for what you get."

Thanks for reading. And, to the "good guys" and "professional contractors" out there- Good Luck and as Michael Stone says, "May the Profits be with you!"


Michael Stone /


No it is not. Your contract dollar amount and your payment schedule should be clearly spelled out in the contract.


Pat (not verified) /

When a job is to be paid for via insurance proceeds, is it customary for the contract to specify the contractor receives net insurance proceeds instead of putting a dollar amount?

Michael Stone /


Without seeing the agreement you had with the company you picked to do your work, it is impossible to say what is right or wrong, what you owe or don't owe.

I can tell you this however, and that is the company owner you picked needs to go back to school and learn how to write a contract so these issues don't come up. If you are having a problem here, you can bet that their other customers are running into the same thing with this guy.

Contracts should clearly spell out what is to be done, a time frame and a clear payment schedule - no gray areas. If you are not 100% clear on what is to be done, what you owe and when, then hand the agreement back to the company representative and tell them to clean it up. If they won't, then don't hire them to do any work. If you do, your post is a clear example of what can and probably will happen.

A good contractor will never present an agreement that is not clear with everything spelled out. When you get done reading an agreement from a good contractor, the only question you may have would be if they prefer a check or would a credit card be OK for the down payment, and when can we get started?


Michael Stone /


Save yourself a bunch of time and grief and find yourself a builder that will give you a firm price quotation, one lump sum for the job. I would be very leary of anyone calling themselves a builder that talks about markup on labor or materials.

Construction is not a market based business, it is a cost based business and can't be compared to any other type of business or their way of charging for their work.

A builders charge for his time is not profit. It is an overhead expense. There is no standard fee for overhead and profit in construction. That is a myth. Every contractors overhead numbers will be different and those numbers are proprietary just as any professional business persons overhead and profit numbers are and should be.

If you will send me a note with your E-mail address (to and your information, I will see if I know a builder in your area that you might call and talk to about your project.



Kevin (not verified) /

Hi there. I am only two weeks into the home building adventure. We bought our property, picked a plan and are now looking for a builder. When we met a builder tonight he mentioned in passing a markup for materials, so I started searching if this is normal and I landed on this wonderful site. I am all for the builder making money, but marking up the materials just doesn't make since(to me) If the customer chooses cheaper products the builder will make less. If the customer chooses expensive materials the builder will make more profit. The builder will also be charging for their time, would that not be considered profit? Wouldn't it make better sense to charge a standard administration fee to cover overhead. A weekly rate to accommodate both short and long term contracts. This way it is up front to the customer and is independent to the quality of materials and finishes chosen.
Am I missing something here? Thanks Kevin

Sue (not verified) /

Listening to both sides of your stories is helpful. There are very good contractors and very good customers. Here is my story:
I recently hired a contrctor who called his guy to do the work.
I replaced a picture window, removed a porch to let a gas line in and the porch was saved and placed back. I also has a storm door fixed so it would shut properly.
I also had some estimates done for a few other small repairs in my home. I got a quote which made my eyes pop out, but then at the end of the estimate there was an houry rate of $68.00 per man hour, anything above and beyond the original estimate.
The bill came to over $5000 for 2 men to do the window door and porch. I am very happy with the work.
Now, When I got the bill the first line said administative fees
8 hours and 4 hours for a total of $600.00 then, I got the line by line of the work. What administrative fees?? Never said a word about it on the estimate.
The guy who did the work said it was from the boss not him.
I refused to pay. I feel I gave the company the money for the work they did, agreeing to the hourly rate.
It came back to me as this wasn't administrative fees it was other fees while he's at the office, covers workers comp when they bring my debrie to the dump. I paid the dump fee and the hourly rate for that already.
Do I feel ripped off, no but This is an added fee not agreed upon and was not on the estimate.

Any thoughts?

Anita (not verified) /

I stumbled on this site by accident while checking to see if we are obliged to give a customer on a bid job our receipts.
I am so used to articles and blogs talking about how awful contractors are- what a delight to find one that gives us a chance to air our side!
We are a small company- my husband, son, and myself and we've been in business since '89.
We are by no means wealthy but we are paying the bills and for that we are grateful.
I don't know if anyone mentioned how hard it is to get quality materials. We spend time going through every piece of lumber at a lumber yard because so many are sub-standard. We've had to figure out how to make poorly made cabinets and windows fit, and these are from high quality manufacturers!
I'm not bringing this up to tear down the building materials industry, but to let people know that a good contractor will be an advocate for the homeowner and spend many uncompensated hours making sure the quality is the best possible.
About the homeowner acting as the general contractor: totally understandable in a tight economy. But we have had to work very hard to make everything come together because the homeowner/general doesn't know what he or she is doing.
There are so many intangibles involved in that bid you get from your contractor.
Our best business comes through word of mouth (also our only advertising) so I would suggest talking to friends and neighbors who have had work done.

Nancy (not verified) /


that makes sense... thank-you! She's had enough issues going on in her life. I really didn't want this guy asking for more than he was due. I'll show her your reply. Thanks again.


R.Kaz (not verified) /

I agree with Michael. I have seen contracts where bonuses have been stipulated but they are usually very specific and for very specific terms, up front and in the contract, maybe for an early completion or finishing under budget. I'd say the cost of lost appliances would definitely be subtracted from any contracted bonuses if not an insurance claim. Without knowing all of the specific details, it’s difficult to give an exact answer but my gut is telling me something doesn’t feel right about the situation and I would suggest you contact someone to help protect your friend’s interests. Maybe a lawyer that has some experience in construction contract law.

Nancy (not verified) /

Thank-you Kaz,
I will forward you comments to her also. How the appliances turned up lost is: for insurance purposes there was a list of items that were unsalavageable and to be disposed of, and then another list of items that needed to be removed for protection during contruction. The construction company that did the demolition treated the items on the second list as items to be disposed of (they say, very hard to believe because it was obvious there was no damage a couple of these). I agree that there ought to be a clear chain of custody and an someone should be liable!

Nancy (not verified) /

I'd like to ask a question for a friend of mine.

She had a hugh remodeling job done on her historic house, needed because of a fire. It is completed now and looks beautiful, in large part because she made sure she got the materials she wanted. She has health issues and knew it would be difficult to monitor the construction the way she would like to, so she hired a project manager to oversee the work. I know the project manager did some good interventions in some problem situations but from what she told me, he also dropped the ball on some things. (Expensive appliances taken out of the home for storage were 'lost'.)

She is well aware of how to draft contracts, and I know she is fair in compensating people. The work has been done for about 6 months now, but recently she has received a couple of phone calls from him asking if she is going to give him more bonus. She already gave him a $1500 bonus at the end of the work. She is rather perturbed that he would have the gall to ask for more. I asked her if there was anything implied in her conversations with him that she would pay more. She says 'no'.

So my question: is it customary to pay a bonus at the end of the job, and if so, how much would it be? Thanks

rose dilley (not verified) /

we have just had our home sided, a two week job that has taken a month so far, and they still have finishing work to do. My question is, we have 6 square of siding left over. I assume we have paid for it. Can the contractor return it for a refund?? I think that is a rip off. He says we can buy it for $700. We did our home work and thought we were hiring a good company, but this feels like a rip off to me.

Michael Stone /

Rose Dilley:

Check your contract. It will (or should) say if the contract price was for the entire job or by the square. If the job was sold/priced as a lump sum, you are not entitled to a refund. If the job was sold/priced by the square, the contractor will probably return that material to the supplier for credit and you would probably be entitled to a partial refund for those materials returned.

Keep in mind, if the job was sold as a lump sum contract and he needed EXTRA squares, he can't come to you to ask you to pay more. It goes both ways.

Job completion being delayed does not necessarily mean that you got a bad contractor. Stuff happens, and you have to live with it; bad weather, vehicle break downs, people getting sick or injured, slow inspections, incomplete material deliveries, bad materials, owner-caused problems and delays and the list goes on.

If you are feeling ripped off, maybe you picked the wrong contractor. Picking a good contractor will seldom bring on those feelings. On the other hand, when I do arbitrations, almost always those who feel they have not gotten a good deal or the contractor did them wrong were those who chose their contractor based on price. I can't think of a dumber way to pick a contractor than getting the lowest price.


Michael Stone /


A 4-day installation with 3 workers isn't a small project, especially with two panels. I wonder what a doctor would charge for 4 days surgery?

I have been wiring houses and buildings since 1957 (my own buildings by the way) and I wouldn't hazard a guess if his price was too low or high unless I could physically see and understand the job to be done.

But if his original estimate was $6,500, did something change in the job? Did you add or take out something, or did he find problems during the project?


Welly (not verified) /

My contractor is asking for $9000 for 4 days electrical work by 1 electrician an 2 labourers to put in new sub and mains panels and to move 2 light switches. Is this too much? It seems way too much to me, His original estimate was $6500.

Hey really hits home. The ones out here trying to do it the rite way really need a copy to submitt to the client along with the estimate.

Richard (not verified) /

I have noticed several people here asking about what is the going rate in their area. Your book "Markup and Profit; A Contractors Guide", is that valid for all areas? I am in Alberta Canada. Will the info be useful anywhere? In the past, I also have made the mistake of been one of the 90% you mention who undercharge. Knowing and understanding how to price your work properly creates its own line of "fairness".
And a tip (especially for new guys starting out). I have more than once hired people for small casual work, who, when it comes time to settle the bill, look sheepish and hesitant and almost guilty as they tell me the cost. Yet... the price was actually quite fair for what they did!(In one case, I actually volunteered extra to make it "more fair" for him). The lesson I learned was to be confident and comfortable when declaring the price, whether as a quote or after-the-job final total. Looking sheepish sticks out a mile away and instantly sends the message that even YOU think the price is too high. Ironically, these people are usually the ones who undercharge. There is no reason to feel guilty. (Except to their wives when they get home with such a small paycheck).

Michael Stone /


2 things:

Fair is whatever sales price you need to charge to pay the job costs, pay all your overhead and make at least an 8% net profit.

Markup should only be based on your company numbers, never on the type of work you are doing. Whatever type of work you are doing, your estimate should include labor, materials, subcontractor costs and any other costs for the job. Total that number, multiply it by your markup and that gives you your sales price.


Seth (not verified) /

I've found that providing customers detailed bids helps ease their mind. The contractor industry has gotten a terrible reputation for scamming and bleeding money out of consumers. If you give a detailed breakdown to a customer and sign a contract, there's no questions. The only reason to not to this is if a contractor isn't technologically savvy enough or has something to hide. It doesn't take more than a few hours to do (coming from years of experience). Buying a home or making any large purchase of over $100,000 is one that should be dutifully researched and all areas checked over to ensure you are getting what you are paying for and what you expect. The best way to get everyone on this same page is with a detailed breakdown.

Roger (not verified) /

What mark-up percentage is fair for a window estimate?

Michael Stone /


Your entitled to your opinion as we all are.

The large majority of the best contractors in North America do not give detailed anything until they have a signed commitment from their potential customers and that is the way it should be.

Those that try to sell a job using detailed breakdowns waste a huge amount of time and essentially are order taking. Those that sell themselves first, their company second and then deal with the job, seldom have requests for additional information above what they would provide on their contracts.


sorayaz (not verified) /

great site to come across: I'm about 3 weeks into a small but total bathroom (6 X 10) remodel. Situation is one skilled handyman who works for a GC whom I contracted with (and paid a deposit too, naturally). Very pleased with the quality of work. I purchased all fixtures, paint, baseboards, flooring, drywall. Today the handyman volunteered the number of hours he has racked up and the materials expenses so far.
I have two questions:
1) Due to my work schedule (I work nights), I've been here when handyman has arrived and left. Is a 16 hour discrepancy between my informal log and his orally reported hours to me today something unusual? This is over a 2 week, 1 day schedule that included his not working for two full days due to other obligations. FYI: I was advised to keep the log by the sister of the GC as there have been issues with this handyman over-reporting his hours. I found this out after i agreed to a contract. A mite bit disconcerting, but his work is SO good that I was willing to go with him. Plus I live in a very rural area, and it's priceless to know someone who does good work even if they may have made an error in judgement in the past.

2) Am I understanding correctly that materials itemization is NOT usually done at the end of a job? I am not talking about every nail, bolt and screw.. but a very general itemization of materials purchased. I'm not a distrustful person by nature, and as mentioned, I am friends with the sister of the GC, but to use the automobile repair example another commenter did: if I put my car in, I do expect a very general breakdown of what they did, and what it cost (my cost, not their's: I'm deeply familiar with and expect a reasonable markup).

I am a professional chef, so understand very well that it is misguided to apply only raw costs to what a craftsman will charge which must have their expertise, talents and experience added onto it.

I was going to write the general contractor (boss of handyman) a praising note regarding the quality of handyman's work, and also inquire about getting an itemized materials bill but am unsure if this would be seen as an offensive question. Hence my google search led me here.
Your patience and perspective would be appreciated to this neophyte to the world of home remodels.
thank you

Rudy, this is the second time you've posted on this thread, you also listed your complaints against contractors back in April of 2010. I don't know what you do for a living, but you obviously don't like contractors. This blog is for construction related companies and was not meant to be a place for blast uninformed and biased attacks on contractors. We considered deleting your comments, but we won't because we appreciate hearing from homeowners to get their point of view.

To review a few of your comments. Contractors do in fact have the right to charge whatever they want for their work including a markup on subcontractor work. Trying to dictate to others what they can or should do based on your own opinions simply doesn't fly. This is America and we have a free enterprise system. While some folks may not like certain parts of the system or the way others interpret how that system works, you don't have the right to tell them how to operate their business. You do have the right to not do business with them.

You sound angry – and folks with your expressed prejudice against contractors are the first to blame the general contractor for problems with a subcontractors work. "You hired them" would be the cry and you would expect the contractor to pay for all the corrections or repairs. Tell me, Rudy, where will that money come from? Because if the contractor priced your job the way you consider correct, there would never be any repairs made because the contractor would be broke and out of business.

The reality of (to use your words) a fair estimate is that it must include enough money to cover all the contractor's job costs, all of their overhead expenses and enough money to make at least a reasonable net profit. That's math, and there are few companies with deep enough pockets to sell jobs at a loss for long. Especially construction businesses - those who tried are out of business by now. If you don't charge enough to pay your costs, your company will fail. And why should a contractor take money out of their pocket to provide repairs or improvements on your home? Because that's what they will have to do if they don't charge enough for their work.

You said you believe contractors are supposed to set their prices based on what the economy is doing. As I said earlier, those who tried that are out of business by now. Construction is not a market-based business. Construction is a cost based business and each job must stand alone. The time of year, the economy, what others are charging for their work and what uninformed owners think contractors should charge for their work has nothing to do with what that contractor will pay to build your job. And they deserve to collect from you everything necessary to build the job and make a reasonable profit.

If you believe you can hire subcontractors to build your job and you will get better prices and service than going through a general contractor, then do it! I can tell you, based on my 50 plus years in this business, that the attitude displayed in this post will keep most good subs away from you. I'm sure you are a great guy when you aren't upset with contractors – but it's easy to see that this project is headed for trouble.

We do agree on one point – when the economy was great, many contractors wouldn't even bother returning phone calls. I used to talk about that a lot – see my Ten Cardinal Rules ( – but I don't have to any longer. The contractors who survive this downturn will be much smarter and hopefully more responsive to their clients.

Finally, I'd like to ask you to consider the following. For some reason home and/or building owners complain when a contractor charges a fair price for their work (enough to pay the job costs, their overhead expenses and make a reasonable profit). Normally, that fair price will end up between 35% and 50% over job costs. But they don't complain when insurance companies markup their services over 1000%. Or when shoe manufacturers markup their products, or doctors and attorneys markup their services. When you buy furniture for your home, the markup on those materials are all a minimum of 100% over costs.

Calling contractors crooks simply confirms your lack of knowledge about what happens in construction. I am a certified arbitrator for the BBB and focus specifically on construction related jobs. I've seen as many home or building owners not telling the truth as contractors who've caused problems.

It is easy to hide behind a keyboard and take pot shots at others but I encourage you to learn something about the construction industry first. Overall they are one of if not the best group of people that anyone could want to deal with. Have you considered starting your own construction business? There's a saying about walking a mile in someone's shoes.

Michael Stone /


First, I would call the owner of the company and arrange a meeting with him or her, your handyman and yourself. Get the time issue ironed out now because the longer this goes on the worse it will get.

This is one of the reasons that I recommend that the maximum amount on any handyman job should be $2,500. Owner's think they can save money by buying their own materials and then hiring a "handyman" to install them. When you weigh it all out at the end of the job, owners rarely save any money using this approach. The buying public should quit worrying about a contractor overcharging for his or her work. In well over 90% of all contracts written, the contractor has undercharged for their work or service and this we can easily prove. Find a good contractor and pay them to do a good job. You will find that the good contractors are very fair in their pricing.

A good contract will 1) answer any questions about what is or is not to be done on a job, 2) the materials to be used and 3) will include a good payment schedule.

Itemization is not necessary with good contracts. Itemization takes a lot of extra time and unless you are willing to pay for the contractor’s time to assemble all that info so you can read and understand it, you should not ask for it. Contracts are supposed to be win-win or as they say in the legal world, an act of good faith and fair dealing.

That is my perspective, for better or worse. I hope you can get the time issue resolved and next time, insist on a fixed figure contract.


What should be "the going rate" in my part of the country? I have been a remodeling contractor for over 25 years in Suffolk County, New York. I work primarily by myself and focus on interior woodwork. Everyone in the trades who knows me considers me a master carpenter and cabinet maker. I am working right now for the owner of a large HVAC company at his home. I am repairing a pan leak in a walk-in shower stall which is over a finished room below. I could not estimate the work before breaking some tile and getting down to the pan to see how it was constructed and to what extent I would have to rip out more tile to make the job right. The customer was ok with my approach as I have done much work in the past for him. After 2 hours, I called him and gave him an estimate to repair the leak and retile.
$1,500.00. This will take the remainder of the first day, another full day and 4 hours the final day for a total of 20 hours if all goes well. My material costs are $250.00 plus $50.00 mark-up. So we are looking at for labor $1,200.00 divided 20 hours equals $60.00 per hour.
He was shocked at my quote. I asked how much his mechanics are billed out at and he said $135.00 per hour. So I said would you want me to work for even less than I am quoting? How can you justify the discrepancy between our rates? He said he has huge overhead, shop, offices, inventory and he pays his men's medical plans.
I offered to pull off the job and just pay me for what was done and he said, no, you are one of the few people I trust to get the job done correctly, I will (reluctantly) pay the bill.
Ok, I understand different businesses have different overheads, but there is a strong misconception that when you are an individual, your costs are tiny and you get to keep most of the money you are paid. I even had one customer in the medical profession pay me at the end of a contracted job and say she thought I must be living on easy street because I made more money per day than she did.
Well I don't know about the rest of you out there, but I pay for my family's medical insurance, I have an accountant, a website, an uncompensated wife keeping up the paperwork end of the business, office space and a large amount of shop/storage space in my home that we can not use for our personal use, our family car which goes out on estimates with me, major tool investment and upkeep and or replacement, my truck, which after 10 years now needs to be replaced (30K), behind the scenes work which is uncompensated...taking care of and organizing all that business equipment...and then there are the three trade journals which I read religiously to make sure I am up on the current materials, methods and codes, as well as all the internet research I do to keep myself current.
So the question is, how come I can't get more per hour like the guy who claims to have so much more overhead than me. I bet if you broke it down, our operating costs per billable man hour would not be that far apart.
I getting older and feeling dumber by the day. I will probably have to work until I die or just eat peanut butter and live in a cardboard box in some milder climate than NY.

Thank you for some excellent tips on what to expect when remodeling and how to do it on a budget. In my eyes, a budget is simply how much money you are willing and comfortable to invest in each project. It is very important to be honest with yourself and your contractor about your budget so that they can assist you to get the very most value out of your remodeling dollars. Sharing your budget also helps your contractor to understand what type of products to suggest for you as well as help you understand your options in a “good, better, best” situation.

Michael Stone /


Your comments pretty well spell out the situation. You need to get two books, read and apply the contents. Our book Profitable Sales; A contractors Guide will help you get your prices up where they belong. When you are done with that one, then get Tom Hopkins book, How To Master The Art of Selling. Those two books will give you the tools you need to sell your work at 25% to 30% more money than you are now charging, which obviously is not near enough. If you have any questions about what the real price should be for your work, then read our other book, Markup and Profit; A Contractors Guide.

It's all about sales my friend, not being a mechanic.


rudy (not verified) /

Amazing that so many GC's think that they have a right to mark-up subcontractors work at 30-50% more than what sub costs if hired directly by homeowner. The reason why nobody trusts GC or for that matter any GC or builder is simply because most will not give you a fair estimate. Everybody is entitled to earn a living and the quality of their work should be reflected in their price and the only way that this works is based upon supply and demand as well as excellent referrals and testimonials from the homeowners. When the economy affects all walks of life then the contractor must also sharpen his/her pencil to reflect the economic times that we live in. When the economy was great contractors wouldn't even bother returning phone calls for they had so much work that they could pick and chose the jobs that they wanted. Today we are all suffering yet many of the GC's and contractors out are still living in the past and think that their work should be paid at the same rate as when the economy was great. I received several proposals for a kitchen renovation and I asked for a breakdown of the costs for each segment of the job such as floor, electric, plumbing etc and was flabergasted by the mark-up in prices. I decided to call each contractor who specialized in the required work and found that the GC was building a huge surcharge over and above the work to be performed the same can be said about the kitchen cabinets which were also 50% above cost. I can't come anywhere close to charging even 10% above cost in the market that we are in yet the contractors feel entitled to charge 30%-50% above material costs.Its hard to believe some of the prices that I have been quoted by GC's and as a result of this I decided to concentrate on finding a person who does 80% of the work himself with only 20% sub for flooring installation and saved at least 20% in labor costs. GC's are for the most part glorified coordinators albeit some are very good and have very good subcontractors to work with however I find that the homeowner in these days with Angies List and other consumer internet mediums can find very qualified people on their own without overpaying GC for making the same research as you and then benefiting greatly by making the same call to sub-contractor. No wonder GC's have a bad rap because most are crooks.

Jennifer Conti (not verified) /

I understand and respect all of the above comments. We are building a home and working with a local cabinet company to design the kitchen. I am having trouble still accepting the idea that a price quote should not come with an itemization. I believe it is unfair to the customer to not know where their dollars are going. It's like dumb luck. You just show us a number and we pay whatever you say. I don't think I'm getting taken for, I just want to know where my money is going. Why can't the company be up front with us? We had one cabinet place who outright said no to giving us an itemization. I think we have a right to know exactly what we are buying. Buying things without price tags? I don't understand.

Thanks ahead of time for listening.

Nadine K. (not verified) /

We just moved into our remodeled kitchen and it is even better than our high expectations. Our contractors were courteous, clean, on-time and very flexible about adapting when unexpected things came up. The quality is outstanding and we would like to show our appreciation with a bonus but can't find any info on what a reasonable bonus might be. Any suggestions?

Michael Stone /


Bless your heart, thanks for your note. I can speak for all contractors here and tell you how nice it is to hear from someone who is happy.

The best bonus you can provide this company is a well done short, 2-3 minute video telling how happy you are with the entire job. Talk about what they did that made you happy. Give other folks a good reason to call this company.

A bonus of money, eats, whatever are soon forgotten. A video (and telling your friends) will not only help restore faith in our industry, but will also help this contractor show other clients that they are one of the good guys.

Thanks again,


Jennifer Conti:

Your post is interesting and you say you have the right to know what you are buying. Let me ask you a question.

Do you ask for an itemization of all expenses when you go to see your doctor or dentist? How about when you buy a car? Do you ask for the price on each nut and bolt, the metal bracing in the seats, the rear view mirrors, the various parts of the engine? I'll bet you don't, but for some reason people think contractors should donate a lot of their time to answering questions and compiling prices that won't make one bit of difference on how the job is done.

In addition, let's not go down the path of comparing prices or quotes from one contractor to another. I have taught estimating in 44 states to well over 15,000 contractors and I can't compare one estimate to another unless I have both contractors (or more) sitting right at the table with me and answering my questions about what is being installed, how and why. How could an untrained home or building owner compare estimates. The truth is they can't and they waste a whole bunch of contractors time with that nonsense. That is why I tell contractors not to participate in that exercise.

You do need a price tag. You should get a firm fixed price quotation, and if your contractor won't provide one, find another contractor. If you want options, ask them to include a few options in that firm fixed price quotation. Avoid any cost plus or time and material projects, because with those, you won't know the price until the job's finished, and that's asking for trouble.

Pick your contractor using the same approach you use when hiring a doctor, dentist or any other pro that provides a service you need. If you don't trust them, find another contractor. Find one you can trust and let them do their job.


Tommy T. (not verified) /

Well, isn't that a breath of fresh air. Some company out there got it right, made the customers happy, were flexible, within budget, and provided a quality service.

Personally I would like to shake each hand of every man or woman that had a part to play in bringing everything to fruition. It takes a team (from the salesman to the materials suppliers to the admins to the laborers to the subs and, yes, even to the boss :-) ) to make a project flow and go.

As far as a bonus goes, from a fellow construction business owner's perspective, there are two things that outweigh any other compensation or bonus by far. Those two items are the "Two Rs Of A Job Well Done."

The first "R" is "Public Recognition." This can obviously take many forms (i.e. a letter to the company which can be framed, a short video that can be posted on the company website, an article for your local newspaper shining some good light on a blackballed industry, a self-designed "Job Well Done" Plaque that can be posted in the company's office, or a short testimonial praising the company that has pictures of you and your family and gives the company the permission to post that to their website.)

I think Michael is definitely right with the video route. It has been proven time and time again that the best form of marketing is through "word of mouth." Yet, in the 21st Century's online internet craze, if that "word of mouth" advertising isn't on a company's website it will only reach a few people as opposed to whoever visits the company page.

The positive consequence of providing the "public recognition bonus" to the company is that it gives them a better shot at continuing to get more sales and thus more work. I know, from experience, that one of the greatest fears of a construction company owner is to be at the point where your guys are finishing a job soon and yet there is no work on the horizon. By providing recognition to the company you are not only going to be saying, "Good Job. Well Done. Thank You!" but also, "I think so highly of you and your company that I'm willing to put my name on the line for you to get more work."

And the second "R" stands for "Referrals." I have two printed signs in my office in Bold Letters: #1 "How many referrals did you get today?" #2 "In sales, a referral is a key that will open up a locked door of resistance."

I could literally write a whole book, and many have been written, about the importance of referrals to any business. Yet, I digress.

In an ideal world, where everything is perfect and nothing ever goes awry and Murphy's law doesn't exist, the closing percentage on a referral is about 5X more likely to result in a sale than any other type of lead source. So, if you want to put a HUGE smile on the face of your contractor do the following: Type out a sheet of paper with at least 10 Referral Names then add the following: Address, phone #, Age of house (approx), marital status, job/s, kids, pets, nature of relationship with them, and any other pertinent info.

When you give this list to your contractor he will be bowled over with gratitude...I guarantee it!, talk, talk about your new kitchen and the great work the company did and be their best advocate! They will love you for it!

I hope this helps and look forward to hearing about it.


Jennifer Conti (not verified) /

Thanks for your response. When I buy a car, I do know how much the heated seats, the bluetooth, the backup camera, the GPS system, the leather seats, wood grain interior, etc are all going to cost. You get a base price, and then prices with the features at many different levels and packages. I can make a much more informed decision then about the kind of car I want. I don't necessarily need a list of every single cabinet and drawer in my kitchen. However knowing what each feature costs what will help me better match my budget to my wants list. How much does that bookcase in the island cost? Is it something I'm willing to splurge on, or is it only a hundred dollars, and I can keep it? I have no idea! The glass cabinets what about those? Worth it or not? I have no clue. A different color stain on the island, not sure about that either. I have very little respect for the idea that people should purchase something blindly, without knowing what it costs. I believe transparency is good for business. It gives me confidence in my purchase, and power over my money.

Thanks for listening! JC

Natascha (not verified) /

Question - This is less contractor (though I have gotten contractors too) and more "specialist" question. I have noticed that when I have an estimate made in my house for a custom furniture (for example a captains bed for kiddos, wall unit, adult beds, etc). at our home the prices come in significantly higher than the prices for the same work, the same materials when I go to the offices of the various craftsmen. It has happened now with 3 different smaller projects (for the skilled folks, for me of course they are big) from folks that came highly recommended. I did not go with the cheapest quote, but with whom I though would do the best job (from the ones who did not step into my house). Also if folks knew what I did for a living the prices were higher). I thought it was a fluke, but then we started paying attention and the pattern seems real. We have other larger projects for folks we would have happily given to the folks who came to our home, but their incredibly high estimates (compared to the estimates of those in an office) makes me worried so I doubt I will ask them back.

Contractors should make money, it is a business. How do you recommend a customer handle or learn that they are getting a "real" quote, not a look "at the nice stuff in this house and up mark it up" ?

For the contractors out there, how does someone not in the field as a contractor get experience with pricing to avoid that icky feeling when quotes varied so much based on the location I got them? To avoid the, 'oh she's a doc, she can pay' feeling? Contractors should make a profit on work asked to do. I have projects that will require a contractor and we want to both get a great one and also be a good customer (i.e. not those nightmares that I know are out there torturing their contractors) and be given real / fair quotes.

For a job well done - as a customer - definitely the video is a great idea. I would love to see examples of work and real customers that are willing to be references. As a customer, if I can see real examples or even talk to a real customer about bigger jobs, that is the best selling point and far better than a simple "testimonial." A great experience, quality work will get that from me too, I promise.

dion (not verified) /

Maybe someone can help me out here. I recently received an estimate of 220,000 to have an addition put on (20x25), add a master bedroom where the attic is, and upgrade and open up my kitchen. Is this amount in the ballpark?


Best guess is that the quote is probably good. No way to tell for sure without a finished set of drawings and many pictures of the building as is. The best you will get from anyone is their best guess until you do get plans drawn. 220 K is about right for that amount of work.

If you have a good feel for this contractor, your next step is a design agreement to get the process started. Set your budget and stick to it. One of the big mistakes owners make is setting a budget and then adding stuff to it along the way. The second is selecting a contractor based on price.


dion (not verified) /

Michael, thank you for your advice. The contractor im thinking of using has a real good reputation. The one thing I can't stop thinking about is how much this contractor is going to pocket. Its insane knowing these guys are about 30k -40k over marked up costs


FYI - construction has the lowest profitability of almost any business you can think of, and the highest rate of business failure of any business in the US today. They are also audited by both the state and federal IRS departments at the rate of at least 10 to 1 over any other business out there.

Now, when you start fussing about what the contractor's prices are, and your numbers are not accurate by the way, think of it this way. You willingly pay Nike $120 to $130 for a pair of shoes that will cost them $6 to $7 a pair to have made. When you go to your doctor and have him/her examine, run a test or do a procedure on you, you are paying at least double their cost or a markup of at least 2. Then you trot down the street in your new Nike shoes to ask your attorney for their help, and their minimum markup is 1.75 times their costs. Next, you decide it is time to buy insurance for your car, home or whatever and the insurance companies markup often exceeds 1000%. Yet often the only businesses folks complain about is the contractor's price.

Pay the contractor - he needs to feed his family just like you do - and be happy you have found a good one.


Interesting perspectives. Construction IS a price driven industry, I don't like that aspect but it is. Some contractors it is a race to the bottom [price]. I freely admit that we are not the cheapest alternative in our area, but we are responsive. Sometimes we get a client that reads a few blogs and thinks they are an expert in construction agreements etc. We have like many of you time-tested processes and protocols in place that work for us. I try to educate our clients on this and a few are bent on wanting the wheel re-invented for them just b/c they got so-and-so information. I would also say that sure there is sticker shock at times b/c a client says "well my retired father-in-law can do it cheaper." etc. I also try to educate folks that to be a "real" business we need to pursue profit [despite what the current trend is profit is NOT a dirty word]. Being a real business means I am listed with the Sec. of the State of IL, have a FEIN [EIN] number, pay taxes, have professional certifications, have an advertising budget, fund my own warranty program, have the PROPER insurance coverage, provide services like design and layout, work on their behalf with municipal entities and accept most bank cards as payment. We also pride ourselves on the fact that we have never been litigated by a client, trade partner or supplier. In kind we have never had to litigate a client, trade partner or supplier. If I avoid doing business with known litigators. Sure we loose some jobs to the cheap guy which is fine, those are jobs that the clients usually have a skewed expectation level and no matter what you say some are bent on learning things the hard way. The cheap guy has just as much of a right to work as any of us and to a point they fill a niche that I'd rather not fill.

If I walk into a flea market I am going to pay flea market prices.
If I walk into a flea market on Rodeo Drive I am paying way too much. The state of Utah has a mandatory 20% Overhead & Profit markup on every contract, typed, hand written or printed off. There are a million ways to skin a cat, but, first you have to catch one. I have been a contractor for 34yrs and no exact same plan goes the same way in two different homes.

I specialize in FOPM's.
Fixing Other Peoples Mistakes.

Get any contractor you like and when they are done you will have exactly what you want.
Then if you don't like what you got will you mind too much paying me or someone like me two or three times the amount to get it done right?
I believe in Prayer and, Patience is practiced not a given.
The one who will do the very best work for the right amount doesn't exist but in a few fairy tails. Broken down contracts should cost more and you should be charged for asking them to do it.
Supplies have risen in cost to the point I am done with the business Because most gomers(goofy homeowners)lol) still think the cost of going to the store or warehouse to get supplies is all part of the job. Well this is the biggest dispute I have ever had to argue. There are so many contingencies set aside a given amount and once outside of the original bid is costly and even a detriment to the contractor. Insurance jobs and the worst and try to pay the least. Just Pray, be considerate to all people, and remember YOU GET WHAT YOU PLAY FOR. Good Night

Mary (not verified) /

I too have done my fair share of remodeling and paying contractors and this idea of adding a percentage to "build a business" in my opinion, is totally whacked.

It's quite sarcastic to compare and ask if the consumer hiring the contractor would also require a list of each individual nuts and bolts, etc. or if I go into a restaurant do I bring my own steak because it's cheaper. Silly questions. Materials cost what they cost whether you go to HD or the local privately owned lumber yard---and everyone--you, me and the guy next door is looking for the best buy on all products. WE shop to compare quality, features, and for the best price. And yes, if I can get the same good steak and eat it at home paying a fraction of the cost, I will-unless I want to "pay" to cover the cost of the wait staff, dishwasher, and facility costs, etc. so I can enjoy the benefits of being served and having someone else do all the work. I know what I'm paying for when I eat out--it's obvious.

If the contractor needs to add a percentage to "build his business" then yes, he is either not charging enough or he is greedy and getting caught up in what seems to be popular among contractors now -- add a percentage.

If every time you paid for something, if the principle of adding a percentage were implemented we would all be in an uproar. If a contractor is earning $50-$80 per hour--that's a very good rate--I will always want to know what I'm paying someone per hour and WHAT I am paying for in the way of materials--not every single little nut and bolt--but a general breakdown of supplies--for example: doors, window, lumber, concrete, flooring, etc.

I would like to sell you a copy of my new book--How to Not Get Ripped Off By Anyone . . . It's $20.00 -- no hidden costs, but I do add a 20% fee to help me as I work towards establishing my printing company--it might be a long road. If you provide me your mailing address--then you can include 15% for shipping and handling. -- the later actually makes sense doesn't it. Get my point?

This is a great thread and reading what has been said since I posted last makes me want to add a few more items. Folks who want to save a few percent by providing their own materials, and I dont mean a few boxes to tile, bag of mortar and grout [small job] but want to supply everything for something like a whole house remodel. Sure the 30% plus tax I charge may sound like a lot until you consider I get preferred pricing everywhere I deal with. When you [client] deal with a supplier or sub-trade they are looking at you as a one-time-job/sale. as the GC they are looking at me, they guy that is going to give them a dozen jobs in a year and spend thousands of dollars potentially each. We get the suppliers to be responsive, I get free delivery on everything I order which keeps us in the home working not shopping and moving material [wasted man-hours]. We get exactly what we need, return what extras we have and warranty everything we bring into the house for 2 yrs minimum. We not the client will work directly with the supplier say a window seal fails and a factory rep needs to coordinate a solution. It is the same with realtors for example. Clients should not waste their time with "beer money" handyman types for anything other than honey-do lists. Clients need to start asking the right questions and listening for the right responses. Much in the same manner I listen to clients when they say things like "I know exactly what needs to be done and how you should do it." or "I don't need a warranty, I just want it done cheap." There are plenty of guys out there that fill that niche in the industry. We have the integrity to know when a client is not a good fit. Everything we do has to be warrantable, my reputation and integrity are things I will not compromise on. It has served us well for years and at the end when we show up for the final payment we get not only the check in full, a huge smile but frequently a friendly handshake and on occasion a huge hug.

Martin (not verified) /

Here's a situation from the consumer viewpoint:
My contractor, who I've used once before satisfactorily, gave me a $15K and 6 weeks estimate on a bath remod (move a wall 2' to make a 7x8' area, remove tub, move toilet 2', remove and replace custom vanity, walk-in glass shower with slider door, full wall tile, one wall all glass, $1700 fixtures, move vent, electrical, etc.). He never asked for any $ so I paid him $5K 2 weeks in, and another $5K one month prior to actual finish, at which time I asked him where we were because he ended up getting tile rather than me, plus extra paint. He said $18k because of tile, and showed me a general breakdown. One month later after completion, I get a bill for $21K over the 10 I gave him. So a total of $31K and 11 weeks for a $15K estimate. We talked, and he said he thought I understood the $18K was over the original estimate. He knew I didn't have much $$ because I did all the painting on the last job just to save some. I have paid $22K, knowing that there were some add ons like tile cost, more painting, etc., and have no more $$. He said he would go back and check his receipts. That was 1 month ago. What do you think? p.s. The shower still leaks under the door because they didn't angle the curb inward.

Martin, so if I'm understanding you, it seems that when the contractor said 18K you were under the impression that you were going to be over budget by 3k? Another 18K in addition to what you agreed to does not seem right. When we do large jobs communication is crucial, we always communicate change orders in writing and clear them out at the time the client authorizes them. This is so the payouts are current and it does not affect the agreed to schedule of payments authorized on the existing proposal or signed contract. Communication and paperwork can add a lot of wrinkles for folks on both end of the project. So sorry you had a bad experience.

Martin (not verified) /

Yeah, that's my point. He should have told me when we were $1K over (or less) the original estimate, and told me what my add-ons would or might cost me. Problem is, nothing was in writing. There was no contract. (I know, I know.) I might have the sheet that he showed me that had the $18K. Since we worked together before I thought it was okay. As I understand it, Arkansas law is in my favor, but I haven't finished my research. I'll update when when all is resolved.

Here is a example if what contractors go thru: A relative of a good client called me to ask about taking a look at a flooring issue. In summary the 10x10' area in the kitchen was popping the grout [repaired three times I was told] In our short phone conversation I was able to determine a few things that were confirmed when I too a look. 1. This person is cheap. 2. He is a know-it-all. 3. He does not really want the truth i.e. the solution that will finally solve the problem. 4. This person will not be happy no matter what I do.
the home built in '87 had truss type joists spanning 24" o.c. the major crack corrolated with a loose seam in the plywood floor deck. floor deck was 1/2". cement board was not used, tile set on 1/4 luan. Site-mixed thinset was probably not used. tile pas installed post construction as the cut tiles around the cabinet-kick area were sloppy and irregular. Tile jobs done in the build cycle are laid before cabinetry and therefore under the cabinets. This person told me "I don't want a warranty." [first red flag] then "If I follow your recommendations I want to reuse the ceramic tile." This was in response to my explaning that if we did it we would want to do it right and once. I replied to the first with, we only do work we can warranty. In doing so we would increase the ridgity of the joist structure, insure the floor deck is screwed/glued, set new tile [I always recommend travertine] on cement board with site-mixed thinset. On saving the tiles I asked how do you expect me to save the tile, get it off the floor w/o breaking, spend all the man-hours attempting to clean the back and then asume all the risk and peril [warranty] used tile? Gosh, the entile footprint of the kitchen was only 10x10' with cabinets, do actual tiled area is roughly 75 sf with waste! If a person does not want to spend a few bucks to buy 75 tiles than do I really want to do this job? Depot as mid-level ceramic starting at $1 each, travertine would have cost about $350 total. Just in case you were wondering I told him we would "pass" on his preferred fix whichh was cutting out the grout [this will be the 4th time] adding screws and regrouting. This person was not poor or uneducated. The textbook definition of a moron is someone who attempts to solve problems with the same solution continously and each time expecting a different outcome. As contractors we all have a niche to fill, it is not easy to stay true to it when times get lean BUT one thing for certain getting involved in no-win situations is an exercise in futility where no one walks away happy to any degree.
God bless.

Jane Brown (not verified) /

Our original choice of contractor was put in question when they began to show up at our door demanding that we sign a contract giving them all insurance monies without any estimate of their costs. We have met with them a few times and I became suspicious when it was constant and intense pressure to sign on the dotted line NOW. I finally realized that signing that would keep us from getting other estimates and I did not trust them. They call repeatedly to pressure, pressure! They said that if I used someone else, they would bill me for their time which would be considerable. I did not sign anything. Do I have to pay them?

Jane Brown:

Unless you signed a contract, you owe these clowns nothing. These guys are not contractors, they are con artists and should be treated as such. These are the guys that give the good people in construction a very bad name. If they show up again, or call you, tell them to stop contacting you and if they don't you will call the local police/sheriff and file a complaint against them for harassment. In addition, you will file a complaint with the BBB and post a review of them and their activities on Angie's List. Also tell them that if they don't like it, then contact your attorney and give them his/her name and phone number. If they still don't listen, then follow through.

This is a classic case of what can happen to a home or building owner when they run into one or more of the flakes or con artists who hang around our business. They only represent about 2 - 3% of all people in construction but they cause something over 90% of the problems that we have to deal with. Do your homework up front and really research a company before you call them to look at a potential job.

These guys have done this to many others, they get away with it and continue the process until they run into someone that knows their game and puts a stop to it.

Jane, if you will send me your address, City and State, I will see if we have a good, reputable contractor in our data base of clients that might be a good fit for you.

Michael Stone

Jennifer (not verified) /

Would love some advice on an issue that has come up on a remodel. We have a sunroom with severe water damage that we are having removed and replaced with a 4 season room. The work just started yesterday. The windows for the new room were delivered yesterday, and they are not the brand we had agreed to with our contractor, or that are stipulated in our contract. We had discussed (at great length) Milgard Tuscany windows. The windows that arrived are Comfort Design. I have done some research on line, and these windows seem on par in terms of both quality and warranty with Milgard.
When asked why the subsitute was made, my contractor response was simply they are the same quality window, and it won't be an issue. I am uncomfortable with this last minute switch.
My feeling is they got a better price with this window company, and are fluffing up their profit margins on the job. Should I ask the contractor to reduce his price on the windows - or make him order the correct brand as per our contract?


Call your contractor back to come and have a talk with you about this issue. Tell him you want the Milgard windows as per the contract. Whether the other windows are "the same quality windows and won't be an issue" is not the issue. The issue is that he is in default of your agreement. Tell him if he wants to be paid, you want him to follow the agreement. If he doesn't agree to that then tell him you are not going to pay him another dime on the job and that you will turn the "issue" over to your attorney and he can deal with the "issue" with your attorney.

This will delay your job by at least three weeks, maybe longer as your Milgard windows are being made so be prepared for that.


I am always upfront with clients on such issues. We maintain a targeted profit margin and in the event we can get a close-out, or some other deeper than normal discount we gladly pass along some of that good-will to the client. Waiting until the last moment seems sneaky and does not inspire trust. Personally based on principle I would make them provide what was specified. He should have submitted to you a change order well in advance of the delivery.


Thanks for the reply.


I've have worked with over 14 contractors/remodlers in the last 6 years. NONE of them charged enough. I don't get it? I finally told one of them that it would be less stressful for them if they would get out of this business and just do volunteer work. Because at least there you are appreciated and you don't have to pay to be there working!!


My grandfather said about the same thing when he was telling me about all the guys he knew that went broke while he was in business between 1915 and 1934. Obviously things have not changed much if at all. Mechanics become business men and women when they finally realize that this business is not about the price you try to sell your work/service at.

Thanks for your post.


A lot of good contractors charge way too little, but in their mind they "think" they are competiting with others who would fall in the hack column. From a reputable GC's perspective I lool for red flags like "Do you price match" our business is not like sears or kohls meaning that comparing two guys based on them both having a truck, tool belt and ladder do not make them or their services equal. I usually reply with is X company a legal entity? Do they carry liability insurance? What is their warranty coverage? Do they sub-out work?...if so who supervises them? Do they have insurance? Will they insure that anyone that does work on the property signs a Hold Harmless to protect you? Is the crew covered by workmans comp? These are all things that somehow fall by the wayside to the "price". How the potential client reacts/responds to those inquiries determine what kind of client they are or will be. There is a niche for everyone, oddly I've gotten 80% of my new clients won over with that lead-in. The other 20% are not a good match, which is fine. probably 5% of them end up calling back when the job with the cheap guy goes south...we tend to not get involved at that point but I've made a few narrow exceptions. Our base rate for residential is $58 per man hour, commercial $10 more. Which is definitely not barrel-bottom but not snooty boutique work either which I feel is a fair market price for my area. I'd be the first to say that everything is negotiable, for instance a job I really want to add to our portfolio. If a project is close I will kick back a couple of man-hours a day. Example we remodeled a restraunt in downtown Elgin which is 10min from my home and 5min from my kids school. With basically zero drive time and expense we worked eight per day and billed out six man-hours per guy. Everyone was happy. It takes time to build relationships and a solid reputation. With that will come a decent living. Side note the Dodge dealership by me gets $129 per hour which even by my knowledge does not compute [comparabily speaking] a brake job on my truck would have been $1080. Lucky for me I worked on cars before I build homes. It's all relative but I've always thought automotive and medical were two industries not in touch with reality as far as pricing goes. I had a kidney stone once [16mm] and not to sound like to old dude giving my medical history the bills for all the tests and proceedures ended up being nearly 30K! luckily I have good insurance but being knocked out for less than an hour the happy-gas doc made nearly 12K. So yeah the $58 an hour I charge allows me to be a legitimate/honest contributor to the economy, a responsible service provider and a good husband/dad. I sleep well at night and never run into previous clients that are anything but happy to see me around the area. Sorry so long, there are STILL good guys around the industry!

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