ᐅ How much savings on building materials can effectively serve as near-wholesale equity?
Created on: 11 Feb 2022 00:07
J
Johnny82Hello forum,
we are currently gathering information about building a house.
Today I learned something about employee conditions:
I recently started working for a company that, among other things, also deals a lot with building materials, and I can get the materials at the wholesale cost + x% + VAT.
I am not involved with the building materials department, but I share an office with two ladies from that department. Today I asked one of them how it would work if I wanted to build a house, etc.
She said that it’s not a problem for the tradespeople if you supply the materials yourself. It’s basically the exact same materials from the same source, and it probably reduces coordination efforts for the tradesperson. She also said something like, “I’ll handle teaching them if needed!”
So let’s just take that as a fact for now.
My mother works in the Black Forest region for a landscaping company that belongs to a construction company which also builds single-family homes. Their structural construction manager estimated around 600,000 euros for a turnkey house with 140-160 sqm (1500-1700 sq ft) of living space.
We’re currently using this figure as a rough benchmark.
On the landscaping side, materials are charged to the customer with an XX% markup. Let’s assume the structural construction company applies a similar markup and that this is standard in the market.
I am aware of the values for X% and XX%. (I don’t want to sound mysterious; it’s just to avoid a situation where a tradesperson shows up at my colleagues’ work tomorrow saying, “You sell your employees materials at XX% less than what you charge me!” and causes a fuss. Some of you might be able to guess which company I work for.)
What materials are available through my employer:
Everything for the shell construction, windows, doors, flooring, insulation, paints, plaster, gypsum, stairs, bathroom fixtures, everything for interior roof finishing, etc.
I’m not sure if we have the following:
Plumbing materials (pipes for water supply, heating, etc.), electrical installation materials, heating systems/heat pumps.
BUT: We have a building services installation team (three-digit number of employees, so a large team) covering heating/water/air/electricity (including photovoltaics), so this kind of equipment should be available to order.
What we don’t have:
Wood (e.g., beams) for the roof frame itself and “decorative” wood—meaning not the aesthetically visible wood, but only things like battens and similar.
So, long story short, here is my question:
Is there a factor or rule of thumb to estimate how much cheaper the 600,000 euro house would be if I got the materials basically at wholesale cost plus x% plus VAT?
Or maybe something like: If the house costs 600,000 euros, the shell costs 100,000 euros, and of that 30% is material costs? Something along those lines?
And similarly for other trades.
And one more question, even though it might be a bit early for this:
What might be roughly saved if you did the following work yourself:
Painting inside and outside
Laying flooring yourself in the bedroom, three children’s rooms, hallway on the first floor and second floor, basement (so more the “non-public” areas)
Roof interior finishing
My brother-in-law is a master painter and also does external insulation and possibly plastering; he would probably be available at a reduced rate.
I know a lot of “ifs” and “buts,” but rough estimates would be helpful for now.
If we were building in the Black Forest, I would:
Not have the employee purchasing conditions
Only have one brother-in-law with limited skills nearby
But have a friend who could possibly handle the electrical work
And an acquaintance for gas, water, and pool technology
Possibly, the landscaping could be cheaper through my mother’s colleagues
Due to the distance, my own work would probably be limited to painting inside and laying floors in areas where they are not urgently needed (so manageable), and eventually doing the roof interior finishing. Basically a fully turnkey project otherwise.
I’m trying to convert these differences into a monetary amount or at least get a feel for it.
Thanks for your insights!
we are currently gathering information about building a house.
Today I learned something about employee conditions:
I recently started working for a company that, among other things, also deals a lot with building materials, and I can get the materials at the wholesale cost + x% + VAT.
I am not involved with the building materials department, but I share an office with two ladies from that department. Today I asked one of them how it would work if I wanted to build a house, etc.
She said that it’s not a problem for the tradespeople if you supply the materials yourself. It’s basically the exact same materials from the same source, and it probably reduces coordination efforts for the tradesperson. She also said something like, “I’ll handle teaching them if needed!”
So let’s just take that as a fact for now.
My mother works in the Black Forest region for a landscaping company that belongs to a construction company which also builds single-family homes. Their structural construction manager estimated around 600,000 euros for a turnkey house with 140-160 sqm (1500-1700 sq ft) of living space.
We’re currently using this figure as a rough benchmark.
On the landscaping side, materials are charged to the customer with an XX% markup. Let’s assume the structural construction company applies a similar markup and that this is standard in the market.
I am aware of the values for X% and XX%. (I don’t want to sound mysterious; it’s just to avoid a situation where a tradesperson shows up at my colleagues’ work tomorrow saying, “You sell your employees materials at XX% less than what you charge me!” and causes a fuss. Some of you might be able to guess which company I work for.)
What materials are available through my employer:
Everything for the shell construction, windows, doors, flooring, insulation, paints, plaster, gypsum, stairs, bathroom fixtures, everything for interior roof finishing, etc.
I’m not sure if we have the following:
Plumbing materials (pipes for water supply, heating, etc.), electrical installation materials, heating systems/heat pumps.
BUT: We have a building services installation team (three-digit number of employees, so a large team) covering heating/water/air/electricity (including photovoltaics), so this kind of equipment should be available to order.
What we don’t have:
Wood (e.g., beams) for the roof frame itself and “decorative” wood—meaning not the aesthetically visible wood, but only things like battens and similar.
So, long story short, here is my question:
Is there a factor or rule of thumb to estimate how much cheaper the 600,000 euro house would be if I got the materials basically at wholesale cost plus x% plus VAT?
Or maybe something like: If the house costs 600,000 euros, the shell costs 100,000 euros, and of that 30% is material costs? Something along those lines?
And similarly for other trades.
And one more question, even though it might be a bit early for this:
What might be roughly saved if you did the following work yourself:
Painting inside and outside
Laying flooring yourself in the bedroom, three children’s rooms, hallway on the first floor and second floor, basement (so more the “non-public” areas)
Roof interior finishing
My brother-in-law is a master painter and also does external insulation and possibly plastering; he would probably be available at a reduced rate.
I know a lot of “ifs” and “buts,” but rough estimates would be helpful for now.
If we were building in the Black Forest, I would:
Not have the employee purchasing conditions
Only have one brother-in-law with limited skills nearby
But have a friend who could possibly handle the electrical work
And an acquaintance for gas, water, and pool technology
Possibly, the landscaping could be cheaper through my mother’s colleagues
Due to the distance, my own work would probably be limited to painting inside and laying floors in areas where they are not urgently needed (so manageable), and eventually doing the roof interior finishing. Basically a fully turnkey project otherwise.
I’m trying to convert these differences into a monetary amount or at least get a feel for it.
Thanks for your insights!
H
HilfeHilfe11 Feb 2022 06:27Hello,
tradespeople also make a profit on materials by adding a markup. They are responsible to you for the warranty. First of all, you need to find tradespeople who only charge labor and do not add markup on materials.
I don’t think it’s worthwhile unless the tradesperson is an immediate family member.
tradespeople also make a profit on materials by adding a markup. They are responsible to you for the warranty. First of all, you need to find tradespeople who only charge labor and do not add markup on materials.
I don’t think it’s worthwhile unless the tradesperson is an immediate family member.
B
Benutzer20011 Feb 2022 07:16Johnny82 schrieb:
So, long story short, here’s the question:
Is there a factor or rule of thumb to estimate how much cheaper a 600,000 Euro house would be if I could buy the materials basically at wholesale cost plus x % plus VAT? Assume that in the end, you will hardly save anything. Because the contractor will be reluctant to give up a source of profit—and ordering materials is not really an effort for them. So they will likely add a small surcharge on their labor costs. They also have to provide a warranty for third-party materials.
Johnny82 schrieb:
Johnny82 schrieb:
How much could realistically be saved if you did the following yourself:
Painting inside and outside,
Installing flooring yourself in the bedroom, three kids’ rooms, hallways on the first and second floors, and the basement (basically the “non-public” areas),
Attic conversion.
The brother-in-law is a master painter and also does external insulation and maybe plastering, he would probably be available at a reduced billing rate.
It depends exactly on what’s being done. Installing 120 x 120 cm (47 x 47 inch) tiles is a completely different (cost) matter than clicking in laminate flooring. In terms of time, you’ll spend more, but financially you might save around €10,000 (ten thousand Euro). S
Sparfuchs7711 Feb 2022 07:41As long as you don’t know the +X%, no one can tell you how much you COULD save. Without any details about the project or materials, no one can tell you what you might save on painters and similar trades. It’s all nonsense like that.
Also, I highly doubt you’ll find tradespeople for the entire house construction who will use your materials, waive their share of the materials cost, only charge you labor, install everything, and still provide a warranty. Then there’s the hassle if something goes wrong with the materials—who caused the damage, who’s responsible for defects, is it the workmanship or the material’s fault. No reputable contractor would agree to that. Maybe someone might consider it if they know you well.
Most others will simply decline under those conditions. It’s not like they don’t have enough jobs or that the tradespeople depend on such a contract. Live and let live.
If you really want to save, buy the materials under your terms and do as much as you can yourself! Owner-led building saves money. Anything else is a sure recipe for a lot of trouble.
Also, I highly doubt you’ll find tradespeople for the entire house construction who will use your materials, waive their share of the materials cost, only charge you labor, install everything, and still provide a warranty. Then there’s the hassle if something goes wrong with the materials—who caused the damage, who’s responsible for defects, is it the workmanship or the material’s fault. No reputable contractor would agree to that. Maybe someone might consider it if they know you well.
Most others will simply decline under those conditions. It’s not like they don’t have enough jobs or that the tradespeople depend on such a contract. Live and let live.
If you really want to save, buy the materials under your terms and do as much as you can yourself! Owner-led building saves money. Anything else is a sure recipe for a lot of trouble.
I also assume that you won’t save any money.
It’s the same when it comes to bathroom fixtures and electrical components like switches, etc. These are all much cheaper online. In some cases, you can get the exact same products cheaper there than the installer gets them from the supplier at wholesale prices. That sounds odd at first, but it actually makes sense because wholesalers provide a service where the contractor hardly needs to keep any stock.
The contractor receives discounts from the wholesaler. The higher their annual turnover, the better the discount or negotiation margin.
As mentioned, the installer adds a markup on the materials because they have to manage the supply and have internal costs. Also, as a customer, you benefit from their business relationships. They deserve to be paid for that.
That’s why you will hardly find any installers who allow you to provide the materials yourself. Only those who don’t issue invoices usually do that.
In the end, if you order the materials yourself, the installer doesn’t really have less work. They still have to tell you what they need, when they need it. Oh, material XY is currently not available. Instead, XY.2 should be used. Yes. Good luck with all the back-and-forth calls.
As others have said: In the end, you probably won’t save any money if you want to build _conventionally_.
It’s the same when it comes to bathroom fixtures and electrical components like switches, etc. These are all much cheaper online. In some cases, you can get the exact same products cheaper there than the installer gets them from the supplier at wholesale prices. That sounds odd at first, but it actually makes sense because wholesalers provide a service where the contractor hardly needs to keep any stock.
The contractor receives discounts from the wholesaler. The higher their annual turnover, the better the discount or negotiation margin.
As mentioned, the installer adds a markup on the materials because they have to manage the supply and have internal costs. Also, as a customer, you benefit from their business relationships. They deserve to be paid for that.
That’s why you will hardly find any installers who allow you to provide the materials yourself. Only those who don’t issue invoices usually do that.
In the end, if you order the materials yourself, the installer doesn’t really have less work. They still have to tell you what they need, when they need it. Oh, material XY is currently not available. Instead, XY.2 should be used. Yes. Good luck with all the back-and-forth calls.
As others have said: In the end, you probably won’t save any money if you want to build _conventionally_.
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