Buying Materials For Contractors Directly? The Pros & Cons To Consider
When hiring a contractor, nearly everyone is looking for the same outcome: a successful completion of the work for the best (lowest) price possible. It’s instinctual for our minds to ponder how we can save money on the total cost of construction through whatever means possible. This commonly manifests itself through choosing the “cheapest” contractor right from the start, but there are many other ways that clients and general contractors alike try to save some cash when it comes to hiring contractors. One of these ways involves purchasing the materials directly, rather than leaving it to the contractor that’s being hired. Why? Markup. When we receive a proposal from a contractor, their price typically includes labor, equipment and material costs – all of which are then marked up higher to include the contractors’ overhead and profit margins. Clients can therefore save money by buying materials for contractors directly; if clients or general contractors buy the materials, the contractor (or subcontractor) won’t be able to charge overhead and profit on top of these material costs. This means the client gets to keep that money in exchange for buying the material themselves. That’s a big win…right? Well, that depends. While there are certainly some benefits to buying materials for contractors ourselves, there are also some potential drawbacks. Let’s go through the pros and cons!
