Builders profit margins 2011

JonW

Are there any builders on here who can honestly say what percentage todays Dublin builder is making per 100k? Im told good guys 30% per 100k others 10% and some doing jobs at cost just to tick over.. Doing it at cost; does this mean NOT taking a wage also?

If you could give a breakdown that would be great. I'm trying to gauge current prices/profit margins re building on a Dublin site.

If a builder quotes ie. 300k all in for a new build which would take approx 20 weeks and include his % ie. 15% = 45k profit on the job. Would this include a weekly wage expense?

I'm told that some builders add x % profit to the job PLUS x amount weekly wage. Is this the norm in 2011?

Many thanks
J

muffler

JonW wrote: »

I'm trying to gauge current prices/profit margins re building on a Dublin site.

Can I ask you why you are looking for this info and if there's a purpose to the thread?

JonW

Can I ask you why you are looking for this info and if there's a purpose to the thread?

Sure. Planning to move soon and have an opportunity of a site for a decent price. I've spoken with people in the trade re builders prices/profit margins etc and the difference being quoted is quite strange ie some making 15%-30% profit plus wage v some making 0% then you have the black market cowboys. We're split between brining in friends/tradesmen v builder hence my question. Thanks

mfceiling

Every builder will have a different margin on jobs.
Some will price low to keep them ticking over..some might price high as they have enough work on and so price "not to get it" but if they do, then it's a win.
I know a lad who is very competitive but has his tradesmen on tight margins and suppliers even more so...knows his costs down to the screws he buys.
It's a market that is racing downwards but low prices can sometimes mean low quality.
Do you want that in your future home?

JonW

Do you want that in your future home?

Im a big believer in pay premium = receive premium. Heard too many horror stories from people who went cheap. A family member for example had to have his extension ripped down after shoddy workmanship. Cost him dearly in the end and the builder was out of sight for good.

wirehairmax

I dont think this thread serves any constructive purpose. It is mere speculation and hearsay you are basing your figures on and I dont think anybody out there will have a definite answer for you. I do think however that whatever profit a builder can make on a job is their own business after paying themselves a wage and making sure all other bills and expenses are paid. People seem to begrudge anybody making a profit these days and expect work to be carried out for next to nothing. I can however assure you that there are very few contractors grossing profit margins of 30%. 3-5% is much nearer the margins involved, if even that, if that makes you feel any better.
By all means do the work by your own hand, you will ''earn'' every cent you save by not employing a contractor or project manager.
Put the job out to tender with a good set of construction drawings, specification and even a Bill of quantities. If 3-5 contractors are pricing like for like you stand a very good chance of getting competitive prices back based on the specification you desire. Its good to hear that you are not going to be driven by lowest price. Check the contractors previous work and speak to and even go to see a few jobs they have done.
Best of luck with your build

JonW

Did you not read my last post

Im a big believer in pay premium = receive premium.

Im more than happy to go with someone making a 20-30% margin providing they deliver in terms of quality/materials/workmanship. I'm trying to understand a builders costs/profit margins same as I would when analysing products/services at B&Q/Woodies for example. So the 3-5% margin - is this profit on the entire build ie products/labour including/not including his weekly wage? Find it hard to understand that a builder, providing he's above board (Vat/Insurance etc) would take on a 300k project to walk away with 9-15k profit - to be taxed.

hinault

JonW wrote: »

Did you not read my last post Im more than happy to go with someone making a 20-30% margin providing they deliver in terms of quality/materials/workmanship. I'm trying to understand a builders costs/profit margins same as I would when analysing products/services at B&Q/Woodies for example. So the 3-5% margin - is this profit on the entire build ie products/labour including/not including his weekly wage? Find it hard to understand that a builder, providing he's above board (Vat/Insurance etc) would take on a 300k project to walk away with 9-15k profit - to be taxed.

There is a concept called gross margin and net margin.

I'll try to put this as simply as possible.

Gross margin = Sales Price less costs directly related to the job.
Net Margin = Gross Margin less overhead costs.

So for example : a builder gets a job valued at €100.
The direct costs to carry out that job (labour costs, plant hire, materials) =
€70.
The gross margin for that job is €30 (€100 less €70).

The nett margin are those costs for running the business that carried out the job.
These costs would include business owners wages, public liability insurance, office costs etc = €20.

Therefore the (net) profit or margin for the job = €100 less €70 less €20 = €10

Mellor

JonW wrote: »

I'm told that some builders add x % profit to the job PLUS x amount weekly wage. Is this the norm in 2011?

I don't think you understand the difference between profit and wages.

If you are paying a builder directly, his wages are the profit, he doesn't include for his own wages separately.
he might calculate his profit by a % of the job, or maybe he estimates the length of the job and allows for time x his rate (or wages)

Eitherway, the excess is his profit, regardless of how he calculates.


If you are payinga larger company, their may be a PM employed, in this case he is paid a wage by the company, and the price includeds a profit for the company (to cover the rest)

StupidLikeAFox

It not something you'll ever find out really, most guys will be fairly competitive at the moment, you'll have some guys who are nixering and not paying any tax, other lads who are running a tight ship. Ive heard of lads who are up to their neck in it and pricing below cost in order to show the banks they are still getting work.

But in simple terms the profit a guy makes is the difference between his price and his costs. You will be given the price, you'll never know whats going on in the background of his company

cardwizzard

Mellor wrote: »

I don't think you understand the difference between profit and wages.

If you are paying a builder directly, his wages are the profit, he doesn't include for his own wages separately.
he might calculate his profit by a % of the job, or maybe he estimates the length of the job and allows for time x his rate (or wages)

Eitherway, the excess is his profit, regardless of how he calculates.


If you are payinga larger company, their may be a PM employed, in this case he is paid a wage by the company, and the price includeds a profit for the company (to cover the rest)

I think you are away of the mark there. Surely all wages are taken into consideration as are all costs/overheads, and then profit comes after that. I know exactly what it costs me to operate my small business every month including all wages(including my own). Then profit is attached, not bung everything in together and its all profit.:eek:

PaulieBoy

JonW wrote: »

I'm trying to understand a builders costs/profit margins same as I would when analysing products/services at B&Q/Woodies for example.

I'm intrigued by this! So you would ask Woodies and B&Q etc. for a breakdown of their profit margin and cost base before you buy ?
Sounds to me like your trying to figure out the "cost price" for your project so you can push the price down to that. Otherwise I fail to understand the point in this thread...

martinn123

JonW wrote: »

Sure. Planning to move soon and have an opportunity of a site for a decent price. I've spoken with people in the trade re builders prices/profit margins etc and the difference being quoted is quite strange ie some making 15%-30% profit plus wage v some making 0% then you have the black market cowboys. We're split between brining in friends/tradesmen v builder hence my question. Thanks

Very simple way to answer your question.

Get 3-5 quotes.

Then do the job yourself, friends/tradesmen, etc, the difference between the two will be YOUR profit on the job.

Pay yourself a wage.

bruschi

wirehairmax wrote: »

I dont think this thread serves any constructive purpose. It is mere speculation and hearsay you are basing your figures on and I dont think anybody out there will have a definite answer for you. I do think however that whatever profit a builder can make on a job is their own business after paying themselves a wage and making sure all other bills and expenses are paid. People seem to begrudge anybody making a profit these days and expect work to be carried out for next to nothing. I can however assure you that there are very few contractors grossing profit margins of 30%. 3-5% is much nearer the margins involved, if even that, if that makes you feel any better.
By all means do the work by your own hand, you will ''earn'' every cent you save by not employing a contractor or project manager.
Put the job out to tender with a good set of construction drawings, specification and even a Bill of quantities. If 3-5 contractors are pricing like for like you stand a very good chance of getting competitive prices back based on the specification you desire. Its good to hear that you are not going to be driven by lowest price. Check the contractors previous work and speak to and even go to see a few jobs they have done.
Best of luck with your build

agree with this. if a builder is making anywhere from 3-5% then thats about it. most are doing jobs now just to be paying their wages, ie they are not making additional money they can put away, but would hopefully make enough fromt heir wage included in the price to be ok.

cardwizzard wrote: »

I think you are away of the mark there. Surely all wages are taken into consideration as are all costs/overheads, and then profit comes after that. I know exactly what it costs me to operate my small business every month including all wages(including my own). Then profit is attached, not bung everything in together and its all profit.:eek:

exactly. the cost of a job is that, the cost. wages are cost and would be included in the price, not as profit. same goes for other preliminary costs such as scaffolding, fuel etc.

JonW

I don't think you understand the difference between profit and wages.

If you read my earlier posts you may understand that I do.

Some builders are making lets say 5% as suggested AFTER all costs of the build are taking into account including staff wages. My understanding is that this 5% is whats left in profit - AFTER - all costs are paid - INCLUDING HIS WEEKLY WAGE. On the other hand; if a builder gets a job with a 20% profit margin -AFTER - all costs of the build are factored in - NOT INCLUDING HIS WEEKLY WAGE - he sees this % as his wage/profit on the job as mentioned earlier >>>

Surely all wages are taken into consideration as are all costs/overheads, and then profit comes after that

I'm intrigued by this! So you would ask Woodies and B&Q etc. for a breakdown of their profit margin and cost base before you buy ?
Sounds to me like your trying to figure out the "cost price" for your project so you can push the price down to that. Otherwise I fail to understand the point in this thread...

I wouldnt ask - nature of my business is to analyse (as best as possible) the cost process of products including manufacturing. I would do this to price/quality compare v similar branded/non branded products before making a decision.

Thanks for your info/feedback - very much appreciated.
J

Radiotower

I think most builders would be paying themselves a fixed wage each week regardless of how much profit they made that week. The surplus will be in the bank for future investment in plant/machinery etc.

The second scienario sounds like the very small operator who puts the cash in his back pocket goes around his suppliers, takes out big wad of cash and pays them and then what he's left with is his wage. Not the way most serious builders would operate.

If you're that concerned get a proper BoQ done up and get an independent QS to price the cost of the build for you. Send the same BoQ out to builders to all price the exact same thing you did then compare prices when they come in and you can see the profit they have. This will probably give you the profit on your build but wont take into account the running cost of the business as someone else pointed out.

You could then decide to go direct labour, agreeing prices for different trades with each tradesman working to your BoQ but dont forget to add in your own time in doing this work and whether you will hire a PM to run it for you.

Mellor

cardwizzard wrote: »

I think you are away of the mark there. Surely all wages are taken into consideration as are all costs/overheads, and then profit comes after that. I know exactly what it costs me to operate my small business every month including all wages(including my own). Then profit is attached, not bung everything in together and its all profit.:eek:

I suggest you read my post again.
What you describe is the second scenerio I quoted. Paying a company, who in turn pay the wages.
And not paying a builder directly. Can you not understadn the difference?

rollex

I know this is an old thread so no idea if anyone will see this reply..
I'm a video journalist working on a number of short pieces about the housing market. I am interested in how the percentage profit margin for building is arrived at - does the bank demand a certain minimum projected gross profit as a lending condition? If anyone speak to this, particularly professional builders or banking and finance people, please do message me, I would be very grateful.
I can tell you more about myself and the project then if you wish.
Thanks a mill,
Ruth