I've been talking to a rural plumbing firm about a small job that I could do, but didn't fancy doing, and had agreed their published rate of £90 for the first hour followed by £50/hour thereafter. I guessed the job would take between 1 and 2 hours. Today I found out they were going to charge more than £150 for parts that I could easily buy for £50 at retail prices. When they wouldn't justify the mark-up I cancelled and will do the work myself when the warmer weather arrives. I was prepared to pay the (OTT) labour rate but they blew it by putting such a huge mark-up on the parts. Because of greed they lost the job. I feel sorry for people who don't have the option to do things themselves, or who don't know anything about the time jobs take and the cost of materials.
I don't know whether you have ever run your own business, but many people who have not significantly underestimate the overheads for firms like these. You may be right, this firm could be taking the piss. If you actually used them, you might find that they "round down" their hours, or are scrupulous about stopping the clock during tea breaks.
While I am pretty skeptical about TripAdvisor and the like, it is interesting to see what reviews firms get on social media. To my mind, there is nothing to beat a personal recommendation.
What's the standard mark-up for plumbing parts? And what's the recommended retail price for that part you can buy for £50? There are some resellers who pile 'em high and sell 'em cheap, making up in turnover for what they lose in margin and you can't expect a tradesman to compete with that on his trade discount. Of course if the part you can buy for fifty quid only cost the plumber thirty then at £150 he is taking the piss.
One technique is to get the parts yourself, but if they are faulty you should expect to pay for their labour to replace the part.
If you run a business you expect 1,000 working hours from an employee. Simply divide salary + NI, plus overheads van etc and divide by 1,000. That gets you a break even hourly rate.
Another crude way of costing out a job is 3 x hourly cost of employment.
If you add VAT you can see why tradesmen cost so much.
Many years ago when we had a new boiler fitted the gas service engineer we'd used for years said that it would be better if we ordered the boiler direct. That way it didn't appear on his bill and so he kept below the VAT threshold based on turnover.
But, you need to actor in the time taken to go and get the part(s) and the cost of going to the supplier. I've just taken an hour and a 20 mile round trip to get a sack of Postcrete.
The overheads should be adequately covered by the call-out and hourly charges - assuming 3 small jobs a day and 6 chargeable hours means £420/day. Marking-up parts by more than 3x is taking the proverbial
There were a few parts needed, which the company could almost certainly buy for less than I can. They then mark them up by more than 3x - and add VAT when the original price had it included.
How do tradespeople handle deliveries? I can understand what they do if they're on site for weeks (deliver to site, especially large materials), but random parcel delivery that could come any time between 8am and midnight?
I'm sure it's fine if they have an office or a yard with staff available to receive, but if they're a one man band with a van?
I can see the traditional mode of going to the builder's merchant first thing still has its advantages...
People will pay for parts, but they dislike paying invisible overheads.
Even 'call out charges'
Remember that 'hourly rate' isn't for a man with a spade who walked there and got paid cash, there are tools, test equipment, third party insurance, vehicles, membership of professional organisations, stock holding, book keeping and so on.
Marking up parts to full retail plus 40% is a way of justifying a larger bill that people would resent if paid as 'labour'.
I have often wondered if opening a restaurant that charged like this,would be profitable or a total disaster
Entering clean warm well lit insured premises and sitting down at table £13.50 Clearing up and washing plates and cutlery used £3.50
13 minutes of undivided attention from hot waitress in smart clean uniform £7.25
3 minutes of skilled cork extraction from the wine waiter £3
22 minutes of skilled cooking from qualified kitchen staff £22 wine £1.40
1 sirloin stake. £3.50
1 vegetables 0.75p sauces and condiments 0.15p
1 Apple crumble 0.37p
1 cream 0.15p
1 coffee 0.25p
The bill is ~£50 of which actual food cost is around a fiver.
When I had a girlfriend with a pro qualification in catering back in the
70s, that was about the ratio the industry normally used. 10%.
the guy who fixed my boiler was the same. In the end parts were about double what they should have been, so £80 labour + £120 parts turned into £320 inc VAT.
And I think that there were a few parts in there that weren't strictly necessary
BUT I never got that boiler serviced - once in 20 years I think - so in the end the fact that nearly all the parts that *could* go, had been replaced, was probably worth the 'service' charge.
In the end, look at the total job and work out if, in the end, it was worth it.
The plumber could have acted as the customer's agent and purchased on their behalf. The purchase doesn't then count towards the turnover VAT limit. Any fee/profit would of course. "Undisclosed agent" is the term.
It would safest to have a "client account" for that side of business to separate out the two.
If your plumber has given a price based on him supplying the parts at a profit, he's unlikely to do the job for the same labour costs only. Human nature, I'm afraid.
Another term is "disbursement" where HMRC have separate guidance to try to keep thinks simple (well simpler than Vat Notice 700!). Crucial points are to make clear you are acting as agent, don't add mark-up and itemise everything on invoices.
This thread has made me feel a lot better about DIYing. The saving on labour costs has always been an incentive to DIY but I always felt I was missing out when it came to buying parts and materials at retail prices, well it looks like I am quids in there as well.
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