Mar 09
27
We’ve just finished a kitchen renovation and we were stunned to find that all of our hard work tracking down good Ikea cabinets & appliances is essentially wiped out by a 20% “owner-supplied materials” costs. What on earth is THAT??
This was for cabinets and appliances that they installed during the renovation–so not only are they already charging for labor and their own materials, but they also tack on their 20% profit/overhead in ADDITION to this 20% fee!!
Many good answers–thanks.
There is a mention of 20% for “labor and materials” in the contract, but I has assumed this meant BUILDING MATERIALS that the contractor would obviously need during construction…nails, caulk, sandpaper…
So, no matter what you do, the contractor makes a profit on, essentially, ANY money you spend in the course of the project, whether it involved them or not. Wow. What a racket this is.
I’m a website designer by trade, and I would never DREAM of turning around and charging my client 20% for a copy of Dreamweaver or web hosting that they paid for!! All I charge for is building the site!
An absurdity…
Yes, there was indeed a line saying “profit and overhead at the rate of 20% on all of the following: all Owner-furnished materials…” OWNER-FURNISHED MATERIALS?? Yeah, maybe paint and screws, but microwave ovens and cabinets?? I don’t get it.
“Materials” is such an all-encompassing term that they could pretty much throw in “dog food” and “water consumption” as billable items. …and all this ON TOP of a 20% profit/overhead on the total job cost! WOW!!
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It’s their way of covering the profits they lost by not supplying the cabinets. It’s not unusual; mechanics do it with owner supplied parts as well.
Check your contract; if it’s not specifically mentioned, I’d fight it; they might at least split it with you if you have a leg to stand on legally.
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You got shafted. Check you contracts, it may be legal but it is sure a scam. IF I understand you right, the 20 percent is on top of charges for installing them and such. 20 percent for the installation would be about fair, but not on top of all the other charges you said they charged. When I was in the business, we either charged by the hour for installation, or a set- agreed upon fee. You are getting hosed, but it may be legal. might not be, look into it.
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No it sounds like you had unethical contractors
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I assume the contractor provided materials is for construction supplies, i.e., screws, nails, whatever. Get the contractor to fully explain the chagers. I makes no sense to charge you for something you bought independent of the contractor. Advise the contractor that you what an itemized list of items comprizing the 20% material costs as well. Sounds like too many “added percentages” for my liking. No one can fault you for asking for such an itemized listing; it’s your money….
good luck
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As the poster above wrote, you certainly do need an agreement in writing that was accepted prior to this “surcharge”. It’s not uncommon in some professions, but in this case I would fight it, as Ikea (as far as I know) does not offer contractor pricing anyway, and you had no prior agreement or knowledge of this cost. He’s just angry because he couldn’t gouge you for another $70 or $100 an hour, and his milk money from overcharging on materials was lost.
Every mechanic I’ve used has never given me a problem with installing my own purchased parts. Every carpenter that has performed renovations on my house has never even batted an eyelash at this.
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It is standard practice for contractors to add on 10% for labor and 10% for profit, on top of labor and material costs, when bidding a job.
If you paid for materials directly, or through a contractor, you are stll paying for the materials. When people have remodeling work done, they always have to shop for and pick out materials. You would not say to a contractor: “Buy some kitchen cabinets and install them.” You have to choose what you want.
On insurance claims, adjusters require contractors to show overhead and profit as separate items, so they can compare estimates.
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My response would be that it is unethical and makes little sense but the clause “profit and overhead at the rate of 20% on all of the following: all Owner-furnished materials…” kills you. I don’t think you’ve got any recourse if that’s in the contract (even though it’s not good business!)
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Thats normal. I used to work for a company that flipped houses, and all the companies had that clause.
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I’m a contractor. I never heard of such practice, to charge a customer premium on the products the customers purchased themselves. If, on the other hand, the contractor helped you pick out, measured and made a plan of the new kitchen, he’s allowed to charge you for his time.
I’ve not seen the estimate for this job, but it’s a normal practice for me to explain the estimate before the job starts and after, if things were added to the job.
It’s also a normal practice for contractors to provide an itemized list of labor and materials.
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I am a contractor – and yes it is normal (although I think 20% is a bit high). The reason we (contractors) charge for things like this is very simple – If something breaks, works improperly, malfunctions, or if you decide you just “don’t like it” or “want something different” – you aren’t going to call Ikea, Whirlpool, the plumber, the electrician, the carpet company, the hardware store or the lumber yard – you’re going to pick up the phone and call the contractor. So if you don’t like paying a percentage for materials, you need to do the research, planning, design, installation and warranty yourself, AND assume responsibility for any problems in the future and leave your contractor out of it.