How to Get A Proper Flooring
Estimate and Discount Without Getting Ripped Off
Whenever
we do a home improvement, we first find a contractor or company who is going to
do the work and ask them to give us a written estimate for the total cost of
the work to be done. Most contractors
will first present the customer with a lump sum price. Do not accept this and do not ask for a
discount on a lump sum price. Each estimate is comprised of three or four
items; the costs of labor, the cost of materials, taxes, and the costs of the
overhead and profit of the contractor.
When you ask for a discount on a lump sum price one cannot be sure where
the discount is coming from. As a home
owner you don't want the discount to come from the quality of the materials.
Secondly you don't want the contractor to discount the labor by hiring less
than perfect craftsmen. You want the
discount to come from the contractor's profit margin. A fair profit for the
skill and service of a contractor is 15-20% on each job or project. However, I am seeing many companies making a
killing off uneducated consumers on an average of 35-60% with terrible
craftsmanship or materials.
Your
First 5-10% Discount
The best
way to avoid this is as follows: first,
ask the contractor to break the estimate down into its 3 or 4 parts. (labor, materials, Taxes and OP: Overhead and
Profit). Remember some contractors will
apply a small profit margin on the material and a larger margin on labor. In a
written contract specify that the contractor use only craftsmen that have a
minimum of 5 years hands on experience in doing your particular desired task
and make sure that if the job is subcontracted out by the company you’re paying
that they warranty the work of the subcontractor they are using. For example, Home Depot hires out all of its
contracted work yet warranties the work itself.
You don’t want to come into a situation when someone says, “Oh that’s an
improper installation issue. I just sell the materials and you’ll have to go
find the installers yourself”.
Get a
labor square foot, per-unit installation price if applicable. Locking this in
prevents the contractor from charging more later on in a project should you
decide you want to do more work. Then
ask the contractor to break down the exact materials to be used by name, brand,
and specifications for the job and offer to go to the supplier and pay for the
materials yourself. All contractors mark
up materials. If you pay for the materials and pay the supplier to deliver the
materials, you avoid the mark up and you make sure you are getting the right
quality materials for the job (i.e. nothing gets switched out en route to your
house). Plus, you maintain control of
your money and this avoids the “Half-down up-front, never see you again
situation”.
It also
helps you from being over charged. For example: The contractor says you need
1,000 square feet of wood flooring and you buy 1,000 square feet from the
supplier. You have it delivered and you know how many boxes equal 1,000 SF
since you have the invoice. When the job is finished and you have too many left
over boxes then you were mislead as to the square footage of the project. If you have the labor rate separated in your
contract at a per square foot price then you can say, “Hey I have 200 square
feet left over of material and you charged me $2.50 a square foot for labor to
install it I am subtracting 200 x $2.50 = $500.00 off the final balance of the
job. I always write on my contracts
exactly how many boxes are going to come to the house. Watch the installers toward the end of the
job; They will start moving extra material to their trucks to avoid you from
seeing this overcharge as well since they get a paid cut for this extra ghost
square footage as well. Remember all material
is yours if it comes to your home! Count all the boxes. If the contractor gives
you any problems about not paying once he or she is caught, then just remember
this phrase, “Theft of Services”. If you
pay a contractor for work that they do not perform then you can file a
complaint with the local district attorney’s office for theft of services. Don’t be afraid to use this term if the
contractor tries to collect on work they didn’t do or add square footage that
never existed.
Note: The
best way to find a supplier is to contact a products manufacturer. They will then give you a list of certified
distributors/suppliers of their product.
All contracts then go to these distributors to get the material they use
in your home. Some suppliers will not accept
payment from the public but many will.
It’s worth the try of at least a phone call to see how much they charge.
It is safe to say the contractor will always mark materials up 10-30%. So if you have to use a contractor to procure
the materials no matter what get a 5% discount here.
Your
Next 5-10% Discount
Now that
you have specified and control the materials to be used for the job, the next
discount will come from the labor line-item. Most labor is marked up 15-25%. Wow, I know
right? Ask for a 20% discount on this line items total. Settle for 5-10%. Never settle for no discount as the meat of
all profit for the contractor or sales rep commission is hidden here.
Your
Next 5% Discount
Part
three of the estimate should be a tax line item. Taxes should only be calculated on the
material costs only. The reason
contractors give you a lump sum bid is so they can tax the whole project. It is illegal to tax a home owner for
labor. There is no sales tax on labor!!!!
Contractors and retailers don’t pay taxes on labor in a contract to the state
or government and neither should you. By making the contractor or salesman
separate taxes you will get a discount.
Salesmen and contractors tax the whole project and keep the added tax
they charge you on labor as straight profit.
Or they give you a discount of, say, 5% to get you to sign the
contract. What they don’t tell you is
they over charged you tax in the first place.
So you will get an average of 5% discount in taxes if you make the
contractor break out the bid and only tax the materials per law. Some flooring “empires” will not break out
their bid since this exposes this trick they use in over charging their
customers. Also note: when you pay for the materials you know what the taxes
are and you control this number. If you buy the materials, taxes are no longer
a factor for the contractor to charge you.
Overhead
should be 5-10% of the overall total labor price. Not the materials! As you
went through the trouble of handling the payment and delivery of the materials
this is no longer a factor for the contractor’s profit or overhead
factors. Anything higher than 5-10% is a
red flag the company is not efficient and you should avoid that company. Companies
that say they need anything above 10% for overhead will not be in business long
which means how are you going to get a warranty a year from now? Tell this to
the salesman and see what excuses they make up not to mention the look on their
face when they don’t have an answer as they just got caught over charging you.
Breaking
Out The Bid In Its Basic Elements:
Labor/Installation:
$2.50 a Square Foot x 1,000 SF = $ 2,500.00
Materials:
1,000 SF x 5% waste add 50 SF =1,050 x $2.99 per SF= $3,139.50
Tax:
Materials: $3,139.50 x .085%= $266.86
O&P:
Usually buried partly in the materials and mainly in the Labor section already
so be wary of this line item.
Total
Cost of Project: $5,906.36.
If the
contractor does not want to give you a breakdown as described above walk away!
When contractors file their taxes the state and federal government asks for
this breakdown and they can't say no, so why shouldn't you get this same
information? It is your home and you're the boss since you are paying.
If you
get a break down of the actual square footage of a room, as in a flooring bid,
the labor price should be x times the exact room square footage amount. Most salesmen in a lump sum bid will add a
5-to 10% waste factor to a bid and thus mark up the labor as well. There is no waste factor in labor for a room
size. A room size is what it is. It is a
fixed number. The only waste factor is
in the materials that are used not labor and if your room is a perfect square
the waste factor for the materials should only be room size, times 5%, times
the price per square foot of the material.
When you
don't get a bid that is broken out then you set yourself up for overpaying for
a job from the start. When you ask for a
discount from a bid that's a lump sum price beware the discount may be tax that
you shouldn't have paid anyways, a discount from added labor that was above and
beyond the actual square footage anyways, or even if you get a discount you may
then have the quality of the material or craftsman's switched out on you. This is your project take time to control the
different aspects of it. This will also
help to avoid cost over runs and weed out any contractors that are rip offs as
unprofessional contractors want to only deal with people they can get easy
money from. Professional contractors are used to abiding by these terms and
conditions and will not shy away from your requests for a break down as they
have nothing to hide and plan on staying in business.
