mark-up vs. labor prices

[MTupguy]

If, when calculating materials (foam, dacron, vinyl, leather) to complete a job for an estimate, do I use the mark-up in material price to cover my labor while working on said material, or do I use that price as what I sell material for and then charge labor on top of that price?  Just got my 1st "real" job for an architect/general contractor and need to get a bid to him soon.  This is the only stumbling block in my bidding process, and just want to be competitive with the bid while being profit motivated for myself.  Any and all input is welcome.  Thanks!

[sofadoc]

"To each, his own".
I charge a labor price, and a retail mark-up on material. Basically, supplies are figured into my labor price. I try to just give the customer ONE BIG over-all price. I don't want to give them too much to scrutinize.
Some of the board members here charge seperately for every last little supply item that goes into the job.
I think that as long as you charge a price that is fair to you and the customer, there's no right or wrong way to do it.

[bobbin]

I work on "time and materials".  I have a base price for my time (which pays me, my taxes, my overhead) and then I charge for materials (mark up, taxes, shipping). 

[MTupguy]

Ok, let me see if I understand...  whatever I charge for materials is their cost for the materials... whatever time I charge to work on the materials is their cost for the labor... and my mark-up for the materials should have no bearing on my labor cost estimate... and I intend to give them just one lump-sum price, as I've read many posts on the boards here and don't want to break it down and leave any room for haggling.  Does all this sound right?

[kodydog]

That's kind of a tricky question. Over the years I've figured out what my general overhead is and add that to my labor price. This includes mostly supplies and utilities. If your just starting out you haven't figured out your over head yet. Might start with $5 an hour.

When it comes to replacing cushion foam I include that as an add on. Some customers need it and some don't.

Spring work and frame work are another add on. You can ask them if it needs this when your making your phone estimate and they may say no, but then it wont be such a shock when you show them it does.

With vinyl, leather and fabric the cost can very greatly. But you can give a quote on an average price and tell the
customer this price can go up or down when they choose there material.

[MinUph]

If, when calculating materials (foam, Dacron, vinyl, leather) to complete a job for an estimate, do I use the mark-up in material price to cover my labor while working on said material, or do I use that price as what I sell material for and then charge labor on top of that price?  Just got my 1st "real" job for an architect/general contractor and need to get a bid to him soon.  This is the only stumbling block in my bidding process, and just want to be competitive with the bid while being profit motivated for myself.  Any and all input is welcome.  Thanks!

  You cost for supplies is something you need to know and put into your labor cost. As you gain more experience this will become second nature. A chair will take X amount of supplies. Dacron, Cotton, staples, etc. etc. This added to your overhead costs, profits for yourself, the company, insurance etc. defines your needed labor cost. So now you have a cost to do a chair, or a sofa, or a widget of some kind.
  Material costs vary from job to job. This is the fabric. You sell it to make a profit on it. So if you pay $X for it you sell it for $X + shipping + markup.
  These two make your bid.
  Don't be to cheap or you will get that reputation. Be fair and do exceptional work and you will also get that reputation.

[MTupguy]

All these answers are very helpful... just a few more questions... retail mark-up should be calculated how?  As a straight percentage (I kinda know what percentage most people mark-up, but don't want to say cuz some of us don't want to give away the secret), or as this percentage+shipping and taxes?  When I calculate "time and materials" what constitutes materials?  Just the fabric?  Foam, lumber, dacron,staples, etc... or are these the "supplies" I need to add to my labor cost (time?)  The way I am approaching this is, I have (very meticulously) prepared the part of my bid for materials, with appropriate mark-up.  Then, I have estimated the time it will take me to work with said materials,multiplied by my hourly rate, and this is my labor.  So I have "labor/time + materials," right?  This is going to be a brand new, custom booth/breakfast nook, of which the structure is already there, but I have to come up with the upholstery end of, after the fact that it has already been designed and built/finished and all that jazz... Why would the architect do this without 1st having an upholsterer's opinion is beyond me.  Just a bunch more work for me to jury-rig a system... loose cushions which would be easy, but cheap looking or something more structured to give it the look of elegance that the architect has envisioned... It involves woodworking which I am capable of doing, but not equipped to do... What a "CF"!!!  Got designs in my mind and some on paper of what to do, but gonna need a good carpenter to do some of it for me.  Which leads to more questions... but I'll stop here.  Time for a new thread.

[bobbin]

Yes, your labor estimate + your materials cost (which includes your mark up) is how you should estimate the job, IMO.  Any work you cannot do yourself and must "farm out" should be included, as well, with the caveat that it's a good faith estimate and you cannot be held responsible for the final price.  Though if you use another contractor you should stress that the stated price must be within 10% of the estimate. 

I don't use a straight percentage to mark up all materials.  Foam is big exception.  If I went for a full 50% mark up (in retail circles this means doubling the cost I get from my supplier) I could very well lose the chance to sell new foam.  Instead, with new foam prices skyrocketing out of sight I've decided to take a smaller mark up on it.  I don't sell fabric, but again, I'd likely look closely at the prices on-line sources are selling it for and work from there.   As for the "guts" (welting, batting, zipper chain, sliders, hardware) I make sure they make money for me.  It's important to update your supply costs regularly, too.  What you think your cost is may have changed and if you don't check your invoices regularly you're missing out on mark up. 

My late FIL was an architect.  Old school.  He never spec'd. anything out without first contacting his contractors and including them in the bid process!  He was a stickler for details and was on the job site every single day.  Woe betide the "builder" who made endless trips to the lumberyard for "forgotten" items and whose "breaks" exceeded 15 minutes and 1/2 hr. for lunch, lol.  He would never use them again.  He was busy all the time and his cadre of contractors were unswervingly honest and skilled; knowing that working for him would be a guarantee of smooth work; in/out and paid on time so they could move on to the next project. 

[MTupguy]

Thanks everyone for your input... submitted the bid an hour ago and I feel confident... I think... well, we'll see, one of these days may be posting pics of my first "paying" job...  Just decided to add this... my former employer taught me how to do the jobs.... wish someone was there to teach me how to get the jobs... guess with all your helps, I'm bound to figure it out, eh?