While many companies do not always share their mark up with clients, some do right up front. We have been in business for over 26 years and we have done this both ways. While we do not have a specific line item that shows you what our mark up is, we are always willing to share with you what that percentage is.
When we do share this information, we are usually met with a few things. The first being a mystified consumer that has no idea why their project cost is higher than they anticipated. The second is someone who then refuses to pay, and therefore, we lose the job.
So, I thought I would share with you where our mark-up number comes from, the items that it includes and assure you that when Specktacular Home Remodeling charges you this, we do not do it lightly. We do it through thoughtful business planning, experience, wanting to keep our company viable and alive, and also provide our employees with benefits such as health insurance, a retirement plan, and paid vacation days (they work hard and deserve it, after all).
Our mark-up is used to cover our overhead expenses. These are the expenses that we pay even if we do not have work. Some of the expenses vary depending on how much work your project is, the trades we use, and the number of employees we have. I will go over these variables one by one for you. Please know though, each state and each contractor is different.
Insurance: We hold multiple policies that cover various things for our company. General Liability and Bond insurance is required by Oregon. Our liability insurance is directly tied to the dollar amount of work that we do and is also directly tied to the amount of trade contractors that we use throughout the year. Vehicle insurance for our company trucks and trailers. Health insurance is something we feel is also important to supply for our company and its employees.
Taxes: We pay, federal, state, county, and city taxes. Each county and city is different in how we are charged; some require us to pay quarterly, some yearly. For our employees we also have social security, Medicare, unemployment, Federal, and Tri-Met taxes.
Labor Burden: Aside from our payroll taxes, we also are required to pay for workers compensation. But there are some other expenses involved in keeping good, qualified, and happy employees. Health insurance, retirement funds, training, vacation time, and new employee recruiting costs.
Offering these items helps our clients by insuring we have qualified, happy, honest, and hard-working employees that enjoy their job.
Office and Staff: We have rent, office equipment, computers and software, security, the overhead expense of our sales staff, office staff, and project managers. The office gives us a place to meet with clients if needed, have staff meetings, and a phone that is answered by someone. Our office staff does have some time that is billable, but for the most part, they fall into our overhead.
Vehicles: Our company has multiple vehicles that are used, including trailers. Sometimes, we must rent specific equipment that is only used for a job. We also pay mileage reimbursement to our employees when they need to drive their own vehicles.
Communication: This includes a multitude of items, phones, email, internet expense, computer backups, software updates, and snail mail items.
Warranty: When something goes wrong, or breaks, we always want to be the one to fix it. We do our best to ensure this doesn’t happen by hiring employees who take pride in their work, and by paying them well. However, we do have to include a minimal cost associated with this that is involved in our markup.
Owners Salary: We have a mix of owner’s salary that is billable time and some that is straight overhead.
All the above are how we come to review and implement our overhead costs. As the homeowner that is hiring us, rest assured, that while the number may seem high, or not high enough, it is exactly what our company has budgeted for and uses.
This is a benefit to you as the homeowner, knowing that you have a full and competent company working for you. You are assured that if you do have warranty work, we will still be around to fix it. And best of all, when you are ready to do your next project, you have a trusted contractor who will be there for you.