Is contractor overcharging for materials?

[doobrey]

I have just had a small job done by a contractor who provided a quotation broken down into labour and materials. I subsequently bought the materials he required, which cost considerably less (say, half) what had been quoted. He would have bought essentially the same thing, for the same price, from the same place, as I did. He is now charging [quoted total] minus [materials purchased], which is considerably more than the quoted labour cost on its own. He explained this by saying that he routinely overcharges for materials because this is where he makes his money. I think this is unethical, but am not sure what the law says about it. Have Googled a bit and not found much. Can anyone advise?

[mind the gap]

It will depend to some extent on the degree of overcharging. However, in the final analysis, if he quoted you for the job and you accepted the quotation, you cannot really complain when you subsequently discover that he has charged you more than cost price for materials. The time to take issue with that was before accepting the quotation.

Also bear in mind that if he were to charge you only cost price for materials, he would in fact be out of pocket as he is running a vehicle and taking the time to go and collect them, paying for them up front out of his account until you eventually pay him, and so on.

Some tradesmen are happy for customers to buy the materials but there's always the risk that you buy the wrong thing, if it's quite a specialised job.

Next time, offer to get the materials yourself if he supplies the shopping list?

[doobrey]

Thanks for the response.

I appreciate that tradesmen would often prefer to buy materials themselves rather than leave it to someone else, and that would have been fine by me in this case. However, he asked for money upfront to buy materials so, rather than doing that (which I thought might be unwise) I offered to buy what he needed and did so. 'Offer to get the materials yourself if he supplies the shopping list' is exactly what happened.

If he had supplied the materials himself then yes, I think it is not unreasonable to charge something representative of cost/fuel incurred to procure them. In this case, though, it was me that incurred the cost and time to get them.

Similarly if he had provided a total job cost only I would not take issue with it, but I don't think it is honest to itemise 'expenses' which were never incurred. He quoted for labour+materials and provided labour, so arguably he should only charge for labour.

[mind the gap]

Sorry, I misunderstood your original post.

Yes, if you provided the materials then he should not have charged you for them.

Ask him to reduce his bill accordingly. If he refuses, ask him how much he values his good name!

[doobrey]

To illustrate by way of an analogy:

A delivery company offers to supply a new car -
Car (i.e. 'expense'): £15,000
Delivery (i.e. 'service'): £500
Total: £15,500

Customer subsequently makes the purchase themselves direct from the manufacturer and it only turns out to cost £12,000. Delivery company drives it from A-B and charges £15,500 [quoted price] minus £12,000 [cost incurred by customer] equals £3500. So their quoted delivery cost of £500 becomes £3500.

Whether this is legal or not I suspect depends on which part of the quote is accepted by the customer. Are they accepting the £500 delivery charge or the total £15,500? They cannot really be accepting both because the numbers do not add up.

[doobrey]

...sorry, wan't ignoring your response - I just took a while to compose my insightful car analogy to illustrate. Glad you agree, though.

Anything in law (or similar) about this issue? I don't particularly intend to get into a dispute about it without being able to point to something definitive. (I did question the charging methodology at the time but we seem to have a difference of opinion.)

[mind the gap]

I'm not legally qualified so I can't say, I'm afraid. I suspect that if you instruct a contractor/tradesperson on the basis of single amount for a job clearly described as involving X, Y and Z tasks, where Z is something that by written agreement with the contractor you subsquently end up doing yourself (e.g. buying materials, collecting a vehicle), then you must be due some redress.

Legally, it probably boils down to the minutiae of the contract you signed/the quotation provided, but business sense dictates that the guy's a fool if he is willing to lose a future customer (plus all your friends and rellies), plus his reputation locally, for a cheap trick.

A builder in our village has just come a cropper in the same way - my friend, who had employed him to build her extension, discovered on examining his invoice that he had been piling on 'collecting and delivery to site charges' (typically £20 per load) for individual bags of sand, cement, etc, over several weeks rather than organising for them to be delivered all in one go (there is plenty of storage space on site!). When she questioned this, his repsose was 'I always do that - it's how I keep my building charges low!'.

But they aren't.

[Ericthelobster]

This practice has always gone on; however customers are much more aware of these days, since the general public more often than not is able to use the same outlets as the trade. 20 years ago or more, there were lots of places which were 100% trade-only; they sold to the trade at whatever price, which was marked up and passed on to the end customer who had no way of checking or comparing prices.

It's certainly still prevalent - eg I use a local kitchen wholesaler, having blagged my way to getting a trade account(!): they provide their customers (ie builders, joiners etc) with supplies of glossy brochures and printed price lists to give to their customers. However, the actual prices they charge the tradesmen are typically 60% less than these figures. Pretty startling really.

[jjlandlord]

I have just had a small job done by a contractor who provided a quotation broken down into labour and materials. I subsequently bought the materials he required, which cost considerably less (say, half) what had been quoted. He would have bought essentially the same thing, for the same price, from the same place, as I did. He is now charging [quoted total] minus [materials purchased], which is considerably more than the quoted labour cost on its own.

If I understand based on his original quote you said that the cost of material was too high so that you will purchase them yourself.
So I think it can only be one of the 2 options below
(1) He agreed. You only pay him what he quoted for labour.
(2) He agreed but said that he would then need to provide a new quote.

I think what you're explaining is option #2.
Nothing wrong about that: obviously if he provides the materials he can charge you whatever he wants. He's basically acting as a re-seller.

Best option to reduce the price with a VAT at 20% is to discuss payment in cash, if you know what I mean ;)

[Snorkerz]

Will you be wanting to be ripped off by this contractor in the future?

Presuming you can live the rest of your life without using his services, then I would simply pay him what I thought was fair. He'd have to sue you for the rest - would he do that? I don't think he would win the claim anyway if you have a quote that says labour is £X and you paid him £X.

Had to do the same with a gas engineer recently - they cashed the cheque and all has gone quiet. Plenty more plumbers in the sea.

[Ericthelobster]

Have to say I don't really understand why this is an issue... I'd have thought most people are aware that tradesmen potentially mark up their prices, or at the very least, may obtain their goods at a lower price than generally available to the public, but then charge the public the 'normal' price, ie they don't pass on their discount. As has been discussed, the labour charge is interdependent with the materials cost.

If I'm in this situation, I'll either ask for a quote for labour only, or I'll ask for two quotes, with and without materials, so everything's out in the open and I can make my own decision on the matter.

For example, if it would mean that sourcing my own stuff would necessitate filling my car with bags of gravel, sand, cement and plasterboard and making X journeys to Wickes, then its highly likely that I'm going to accept a bit of mark-up by the tradesman.

[jeffrey]

Yes- essentially, the distinction is between:
a. wholesaler/supplier/contractor and retail customer [former can supply latter at a marked-up price]; as against
b. agent and principal [no secret profit].

[leaseholdanswers]

If I'm in this situation, I'll either ask for a quote for labour only, or I'll ask for two quotes, with and without materials, so everything's out in the open and I can make my own decision on the matter.

For example, if it would mean that sourcing my own stuff would necessitate filling my car with bags of gravel, sand, cement and plasterboard and making X journeys to Wickes, then its highly likely that I'm going to accept a bit of mark-up by the tradesman.

That's it in a nutshell; thinking of it as labour and materials overlooks the " labour" of sourcing organising and getting labour and materials to site, and the payment to a supplier before the client pays the bill, the office staff and premises cost and that horrible thing called profit.

If getting competitive quotes always specify, as in this case, the kitchen make and model, and all materials, so that the quotes are identically based and comparable.

Of course the element of risk is there; when the supplier doesn't deliver your personal order, you have to pay the men for standing around.....

[doobrey]

If I understand based on his original quote you said that the cost of material was too high so that you will purchase them yourself.
So I think it can only be one of the 2 options below
(1) He agreed. You only pay him what he quoted for labour.
(2) He agreed but said that he would then need to provide a new quote.

I think what you're explaining is option #2.
Nothing wrong about that: obviously if he provides the materials he can charge you whatever he wants. He's basically acting as a re-seller.

No. I had expected the contractor to provide materials but he said he could not afford to buy them and asked for money for materials in advance. I did not think paying anything upfront would be wise, so asked for a list of what was required and bought it myself.



Presuming you can live the rest of your life without using his services, then I would simply pay him what I thought was fair. He'd have to sue you for the rest - would he do that? I don't think he would win the claim anyway if you have a quote that says labour is £X and you paid him £X.

As it was I didn't make an issue of it. I paid what he asked for and explained that I did not agree but was not going to argue about it. I will not use his services again or recommend him to anyone else.



Have to say I don't really understand why this is an issue... I'd have thought most people are aware that tradesmen potentially mark up their prices, or at the very least, may obtain their goods at a lower price than generally available to the public, but then charge the public the 'normal' price, ie they don't pass on their discount. As has been discussed, the labour charge is interdependent with the materials cost.

This was not a case of obtaining a discount and charging retail, but rather charging 160% of retail price. I would not take issue with contractors adding, say, 10% to the cost of materials to compensate for having to buy them (although I would suggest it might be fairest and most transparent to add this amount to 'labour' and leave materials at cost - or at least retail - price.)



That's it in a nutshell; thinking of it as labour and materials overlooks the " labour" of sourcing organising and getting labour and materials to site

In this case I purchased and transported the materials to site myself so I don't think the "reasonable markup" justification applies.