Posted By Alton on 14 Feb 2012 02:30 PM
Lbear,
Some contractors that I know would not consider upcharging that much as ripping someone off. It can be seen as another way to increase profit margin. Sometimes, it is a sad world that we live in when we hear of things like this.
I've seen it done before, many times. The contractor tries to play it off like they are not making any extra money on these things, as these things are material costs that they have no control over. They then charge the homeowner an extra $20K but it is pure profit for them. This type of stuff is what gives contractors a bad name. Of course contractors need to make a profit, just name the labor price and be done with it, but I hate when they con and scam.
I've also seen this done with interior finishes, some GC's will take a $100 fixture and charge the homeowners $200, this is on top of the GC charging for the install/labor. They mark up all the interior finish items and charge double or triple on them, in addition to the cost of the labor install.
Not all GCs are like that but I would safely estimate that 70% of them are that way. In my profession I see the same thing. They tell the property owner that the item costs $400 per item plus $50 per install, and they will then claim that the items are being sold "at cost", which is BS. The item was actually $300 and they just write up a bogus invoice showing $400 per item and they pocket the $100. Multiply this by 100 items and they made $10K in profit plus $5k in labor profits.
If you want to see bad GC's and hear the horror stories, just watch an episode of Holmes on Homes.