I guess this is "General Discussion" material. It's certainly not very "lounge-like" so I'll post it here.

There was a commercial on TV about a bathroom remodeling company offering FREE INSTALLATION (!!!!!) for a brand new bathroom. How can they offer free installation"? They can't, and they don't. They're lying.

Then, how do they get away with that when they give you the invoice?

Here's what happens.

Say you are having them do a tub to shower conversion. Let's say that all the materials retail for $5,000. Well, they can get the materials wholesale for $2,500. But that doesn't matter, because they are going to start with a baseline of $5,000 for the material cost.

Then, they are going to slap on an inflated percentage to that cost for MPC (material procurement cost...the cost of the salaries of people in their purchasing department). Then, let's say that their non-MPC overhead is actually another 25% of that result. Instead of slapping on another 25% for this overhead, they are going to hit you with 50%.

Then, another another 25% for general and administrative expenses Then, 10% for their cost of money. Finally, another 50% for profit. Notice that I didn't include labor or installation costs in there. But also notice that the percentages I just stated are likely inflated wildly enough to "cover" the salaries and benefits that they have to pay their installers

$5,000 x 1.30 MPC x 1.50 overhead x 1.25 G&A expenses x 1.10 cost of money x 1.50 profit = $20,109 for a shower conversion where they bought the materials for $2,500. The installation is covered...buried in the inflated markup on materials.

But it doesn't stop with that simple calculation to $20,109. The customer never sees that calculation anyway. That's THEIR internal, inflated baseline for the job.

They will then internally ask...Will the market bear more than this? Can we sell to this particular customer for more than this? If so, they may mark up the price to $30,000 because they might surmise that the customer may not get more estimates because they have sold their product and process as the "best" to this customer over coffee and crumpets at the kitchen table, and the salesman is really nice looking and seemed honest. And they know that the customer has no idea what materials cost.

And you know what the invoice is going to say? It's going to say this:

Material used for tub and shower conversion.............$30,000
Labor...............................................................................$ 0
Total cost of job..............................................................$30,000

They are covering their labor costs by internally using: a retail material cost rather than their true cost, inflated MPC and overhead percentages, a wildly high profit percentage, and then inflating all of that by what they think they an actually get out of the customer. Their installation cost is safely covered a few times over, and their profit is secured if they can make the sale.

All advertising is complete bullshit, full of phrases and "hooks" to draw in the consumer, and it pisses me off to no end.

"Free installation"

I know I'm preaching to the choir here, but it amazes me how many out there have no clue as to what they are buying.

Years ago, my sister and B-i-L relayed a story to me where they unfortunately let a siding contractor into their home. He quoted something like $40,000 for the siding job. They told him no way. Then he said "Well, we happen to be running a special this week, and if you commit now, we can do it for $20,000. They refused, the guy got pissed, turned red, argued with them.

I questioned why they didn't just throw him the fuck out of THEIR OWN HOUSE.