The electrician and plumber charges will be line item charges in addition to the 12%. So all the power connections, moving gas lines, water lines etc will be billed additional.

where I am it is 20%

My GC charges 10% on everything BUT the appliances. This covers his overhead and I think it is extremely fair. He guarantees the work of the subcontractors including the countertop folks, the plumbers, and the electricians, and he has been pretty dependable about standing behind all of it. He works in close conjunction with a local appliance shop and says he gets no kickback, and I believe him. I am sure he gets an end of year kickback from his cabinet suppliers, which are mid- to mid-high end vendors, but I think this is common. While we had some issues on our most recent project (laundry & guest bath) I am not sure I would ever take on the GC responsibilities he does for a mere 10%. Maybe on a small project, as I've learned a lot these last two years. But I am happy with the deals we've thus far struck, especially the kitchen.

15% is the going rate around here, (so cal) although that can be, and often is negotiable, depending on the size and scope of the project.

With over 35 years as a GC, primarily custom home building, I always spec'd the purchase of "appliances and plumbing fixtures by owner", thus negating any fee from the cost of those items, although the fee would apply to the installation, if and when we were to do so.

Lighting fixtures and carpet are a couple others that would also fall in the"by owner" no fee category.

He did you a great favor by giving a real breakdown of what he intends to charge...

I think the way to look at this is that he is charging you his profit margin on the trades, as you say, and the other subcontractors -- namely the counter fabricator and appliance shop. It doesn't have to do with what he "touches" but with what he's responsible for. Put another way, there is no distinction between "the trades" and other "subcontractors" because he is managing all of them equally.

Now, if for some reason, he were considered completely done with the project before others came in, other subcontractors who were not working for him but being paid directly by you and under your supervision, it would make no sense for him to be charging his margin.

You say that the GC will be "completely done with his phase of the project" but that's the key. Is he completely done or just done with the type of work that you associate with him? If he's completely done, never to set foot upon your doorstep again, then you are right to be concerned; he is obviously not responsible for what he wants to charge you for. But my guess is that you misunderstand his role and that, however little it may look like and eventually be, he is responsible for the counter and appliance people as his subcontractors. But if you are paying them directly, he cannot claim either management responsibility over them or the associated profit margin for them.

As far as it's being a favor for showing a real breakdown, many of us would never hire someone without them showing the bids from the subcontractors and the profit margin.

Then you would never have a fixed bid contract. The contract would be cost plus, and any overages at all in the estimating gets passed along to the customer. If the estimate had cabinets at 10K and the final design was 17K, that's what you'd pay, plus the %. If the lumber has gone up since the estimate, then you pay the difference plus the %. Transparency in numbers comes at a cost of transferring the risk of the bottom line number to YOU.

If you have a contractor with a fixed bid, the number that you are entitled to is the bottom line number. That's what's important. And the specs that go into creating that number. If some material is unknown, then the number used is an allowance, or a mini cost plus element inside the fixed bid. In that situation, you'd still pay the 7K, plus the change order fee.

12% is horribly low for a well done project by a quality professional.

Cost/+ in our area is 20-30% and includes appliances (we shopped for, purchased, and arranged delivery, etc.) countertops, and everything little and big thing involved in the project.

Well I told him I am buying the appliances from the local appliance store and having them install it...He said he would install them but I want them installed by a Wolf/SZ certified installer to get the extra year of warranty. When I told him that he said he would still have to charge his cost plus fee on the appliances. It looks like I will look for other GC as it seems that there are many out there that don't charge their markup on appliances. If I were buying a 5000 appliance package I would probably just go with the guy but with our appliance tab looking to be around 30K I find the 12% markup to be excessive.

Before someone jumps down my throat saying that I should consider cheaper appliances etc...yes I can afford the $4k or so markup, but I don't think I am receiving any added value for it.

The Quote is 12% Plus trades...so I would have to pay extra for the electrical, plumbing and the labor to install the backsplash (which I am sure will be marked up the 12% or more). Our counters/cabinets will probably come in to the 30-40K ballpark so the GC will be making 3600-4800 to remove and hang cabinets. The GC is not doing any design work and no construction such as moving walls/beams etc.

Cost + in our area is also 20% but, for some reason, the only thing there was NOT a surcharge on was the appliances, we bought those direct per our GC's instructions and there was nothing added when they were delivered to the house. The appliance store kept them in storage until the GC organized delivery.

I don't remember the exact number but the line-by-line budget submitted to us by our GC was something like 6 pages long and the contract itself was something like 8 pages long. We went into our renovation with eyes wide open and all questions asked and answered.

"Supervision" for the appliances includes designating the electrical in the right spot, the water in the right spot, the gas in the right spot. And then double checking to be sure that the plumber and electrician do as you've indicated. It also includes looking over the kitchen design to be sure that the correct depth of cabinet box is created depending on if you want your cabinets fully integrated or not. It includes checking the panel that goes on the front. It includes checking the door swing, etc. and other design and installation considerations that MUST be correct in order for the appliance guys to show up and install the appliances. It also includes being there on site supervising when the appliances are installed, in case there is any damage that no one wants to fess up to. It includes him lending a helping hand to tweak the cabinet if needed. It includes a lot of things that you may not "see".

Responsibility for all of that is invisible to you, yet you pay for it one way or another. If you don't pay the GC for it, then expect to DIY it yourself, and actually know how all of those pieces fit together. That means that if the appliance installers show up, and the manufacturer has changed their specs between what was on their website, and the product in their hands, that your GC (or you) will need to deal with that, right then. Manufacturers always reserve the right to do exactly that, and do that often enough that it's a "syndrome" in the industry. You won't know it until they show up with the appliances and something doesn't fit. Then what are you gonna do? YOU will be the responsible party. And not just for the extra expense of relocating that electrical, or altering that cabinet. But also for any extra additional charges from the appliance installer.

You're doing a rather expensive remodel. Don't do it in a halfarsed manner. Pay the experts to do what they do best.

"But the GC will have no responsibility for the appliances. The appliances are being delivered and installed by the appliance store after the kitchen is completed and the GC is done with his phase of the project."

When the dishwasher door can't open without striking the pulls on the doors/drawer fronts, we'll see if the "GC will have no responsibility for the appliances."

Oh, and fixing it means installing fillers. Which means the new granite tops are wrong and have to be repaired/replaced. We'll see how much responsibility he has then.

You will be best served by focusing on the bottom line number rather than the process needed to get there. Contractors need to make a certain amount of money and whether they show it to you openly or hide it away ultimately makes little difference. I prefer to work with contractors who bill things out at cost and add a percentage (much higher than 12%!), but that's only a preference. I find, on average, less gamesmanship (bid low and make it up on the change orders) from guys who are relatively open and straightforward about how they make their money on a job. Would you feel better if he charged, say, 20% markup and excluded the appliances? He'd probably be willing to write it differently for you.

So basically you're saying you're willing to spend 60k+ on a brand new kitchen, (in other words high end), with a contractor who, in your words "is someone who has great reviews and comes recommended from friends" and you're balking at paying him the $7200 he's going to do for a terrific job? Because in YOUR mind he's not installing the appliances?

Even if he's not installing them, he is still responsible for whatever happens while they are being installed as others have pointed out. If you're willing to cheap out on a principle you are incorrect on, then be prepared to get what you pay for. Actually $7200 for a 60k kitchen using someone highly recommended is dirt cheap!

As the old saying goes, Penny wise and pound foolish.

I just have to ask....do we ask Walmart to show their profit margin? Or Nordstroms? Or Lowe's? Business add on a much higher profit (especially in retail) and we don't bat an eye...because we don't see it.

I have respect for anyone that will show me...this is what I bill, because I believe my reputation and service is worth this much. You see exactly what you're getting.

Many GCs don't want to show a profit, so it's often mixed into the overall bid. I prefer knowing what I'm paying for, so I would rather have the 12% person. Even if they aren't 'doing' anything on an item, they are the General Contractor. He has the responsibility for this project. Pay the man :)

Sounds like a deal to me. Someone with a great reputation, recommendations and transparent pricing? Grab him and sign on the dotted line.

The sample contract that the GC has given me states that if anything is different than the specs/drawings provided to him that I would be responsible for the cost of any necessary changes. So if the manufacturer changes something like an earlier poster posted I would be responsible for any costs to change the hookups. Since I am using a separate KD to design the kitchen (this GC does not design kitchens or sell any kind of cabinets) I am doubtful the GC would eat the expense of fixing things if an appliance hits a door handle or something similar.

If I am paying his markup on the appliances should I insist that he be liable for the above two points?

You should be asking your KD if this is even going to happen assuming you have told her what appliances you are buying which he/she needs to know.

Yes the KD has done this. All appliances are in the same spots as current and I have no issues right now. But many of the posters are saying that this is what justifies the GC charging markup on the appliances. If I am paying that I want to make sure the GC has some responsibility for the appliances as well just incase there is an issue.

If your GC insists on the markup on what you purchase, then you should insist that he purchase everything and take responsibility for it. That is what is normal. On anything you purchase, you take responsibility for. He gets his markup on the installation of those items, the supervision of installing those items, any miscellaneous time spent in conjunction with those items, etc. If you arrange for the dishwasher to be installed by your installer, you pay for that with no markup. If the dishwasher won't open without striking any pulls (and the dishwasher was installed correctly), then the GC is responsible for having installed the cabinets incorrectly. He needs to fix it at his cost (without charging you or charging you a markup for that fix). If the dishwasher installer dings a cabinet during installation, then you are responsible for fixing it, which might mean paying the GC for the fix and the markup for the fix.

The above posters don't seem to understand that the GC will, in fact, get paid (plus his markup) for what sophie wheeler is calling "supervision". He's still responsible for all those things, and gets paid for it. He'll bill you his (or his employees') time involved, plus his markup. Cookncarpenter got it right.

We are in CA. Our GC added 10% on each invoice. We let him know what we were providing because we wanted to use some materials that weren't sourced locally. He was also great about having us pay some services directly. We used the electrician he liked, but paid the electrician directly. He acted more like a project manager for us.

On the other hand, if I do say so myself, we are easy to work for/with, didn't pressure him when small delays came up, and enjoyed having him and his partner here!

Just a response to a little part of your query. You mentioned that the "GC will be making 3600-4800 to remove and hang cabinets."

I don't think it is out of line. I paid our cabinet maker $3,000 to install our cabinets (and associated trim), with a lot fewer uppers than most people have and not counting demolition. I think it was appropriate, particularly considering that it involves quite a bit of finish carpentry, a very special skill that cannot be fudged (as least not with stained cabinets). (That's from someone who DIY'd much of the rest of the kitchen.)

I agree with catbuilder; if the GC is getting paid, s/he must take responsibility. The two go hand-in-hand.

Inset cabinets, built in appliances, I'd expect the cabinet installation to be triple that figure. If you're spending more on your appliances than you are on your labor, there is something VERY wrong with the picture.

A good installer can take 10 K worth of cabinets and a good design and make it look like 50K worth. A poor quality design and install can take 100K of cabinets and turn it into a flustercluck that you wouldn't pay 10K to have in your house. You're allocating your budget in a manner that will lead to a poor outcome, with much finger pointing.

The only one really responsible for the pick and choose situation here will be you, as you are appropriating that role of overall jobsite supervisor. Either buck up and accept that full responsibility and take the risk of ''saving'' some money, or pay for someone else a fully appropriate fee to assume the full responsibilities of a GC.

Sounds like there is a profound disconnect between your wants and what they cost if you think that 12% on top of it all, including appliances and counters, is high for labor. Reduce your material costs elsewhere in order to be able to afford the services of a top contractor. Just read the horror stories of making a poor choice for that element if you feel a twinge in doing that. You don't get what you don't pay for.

@sophiewheeler are you suggesting that the labor to renovate a kitchen without major construction and no big plumbing changes should cost $30k just because I am using high end appliances vs the standard big box stuff?

@greendesigns. The labor charge is not out of the budget. I was just trying to figure out if that is par for the course or not. It also seemed odd to me that he wanted to markup everything but then wants to charge me for any additional work if anything comes to the job site with different specifications than what he is provided with.. It seems to me that if he is marking up everything then he needs to interface with the kitchen designer and appliance store and make sure everything will fit and then assume complete responsibility for that.

I think the bottom line is the total charge in the end. Every gc has a different way of figuring his/her fair pay and profit and there are different ways of figuring it. I got a flat charge of 16.5k labor for my kitchen which included complete demo and reconstruction as well as major plumbing /electrical changes but of course had additional charges when we found that the subfloor was bad and had to be redone. He installed the appliances for inspection purposes since Wolf/SZ installers could not get to me in time, but then I got the authorized Wolf/SZ company to come out for an hourly rate to "install" and get the extra year of warranty. It took them (2 installers) 2 hours to perfect the installations including the anti-tip device for the large fridge and cost $345. Part of that time was spent on my Bosch dishwasher that was not part of the Wolf/SZ work, as well as giving me a "tour" of the appliances and how they worked. That was a lot cheaper than having them install 4 appliances from the unopened boxes since they did not have to put the behemoth fridge into place etc. So if you go with this GC you could consider doing that also if you have official appliance installers who would agree to do that.

20% seems to be the going rate around here, for those who are transparent (not everyone).

Have you made arrangements for the KD and GC to go over the plans together ? Have you given both the KD and the GC the specs (I don't mean yes I bought a Wolf range - I mean the actual spec sheet from the manufacturer) for your appliances? Have you discussed the actual floorplans, electrical requirements, plumbing requirements shown on your KD's plans with your GC.

If you and the KD come \up with some plans and you sign off on them and then hand them over to the GC and he follows them, I don't understand why he is responsible for any mistakes that you and the KD made in the plans. He isn't a mindreader and it isn't up to him to question everything you and your KD decided. If your range spec requires 48 1/16" clearance and your KD draws an opening of 48" and you sign off on that and then your 48" range doesn't fit - why is that your GC fault. You have taken that power away from him.

You also mention about the sample contract "The sample contract that the GC has given me states that if anything is different than the specs/drawings provided to him that I would be responsible for the cost of any necessary changes" This clause usually refers to any structural changes or product change that may be required once construction has started. We needed to reinforce the floor beam between the kitchen and the dining room and that requirement wasn't discovered until the place was gutted. Of course, that cost is our responsibility, it isn't the GC's. If your electrical panel needs to be upgraded to handle all your high-end appliances and is discovered after the appliances arrive, that is your responsibility, not your GC's. In our area MW's have to have their own circuit now, the cost of that is our responsibility not our GC's.

You need to send an e-mail to your GC with all your questions and get answers back in the same way.

We gutted our house and I spent years researching everything including code and by-law requirements (I happen to love doing that and I do hate surprises when it involves my money). I questioned and questioned our GC on the contract. If you're not happy or confident then walk, but if you start nickel and diming the job, confrontational issues will come up.

@blfenton. I never intended for the GC to be responsible for the specs of appliances and cabinets. All I want him to do is remove and install cabinets and put the appliance hookups in the right place. The problem is that he wants his cut on the appliances as well which he is not ordering or installing. I emailed him asking him if he will work with the KD and appliance store to make sure everything is correct before anything is signed off on and he said that he would charge additional for his time to do that. I have decided not to use this guy because he will be getting paid to the tune of $10000+ to remove and hang new cabinets, move a couple appliance electric/water hookups (no new hookups) and "supervise" the installation of a countertop...for that kind of money I think he should be working with the KD and the Appliance store so that I don't have to do it...a GC is supposed to make the project go smoothly through each step.

Malba have you ever had reno work done before? It sounds like you are a complete newbie when it comes to this. I may be wrong but I don't think the GC is out of line at all. You don't intend for the GC to be responsible for the specs? So when his guys put the cabinets in and they are off a bit, who is responsible? And if the specs are wrong and it's yours or your KD's fault, why shouldn't the GC be paid to make it right?

Frankly, I hope we don't hear you complaining a month from now because the GC you hired didn't do as he/she was supposed to do. Or if you get a fixed price and then find the floors need to be reinforced the price goes up even more because the new GC never discussed with you HIS markup and it turns out HIS markup is 20 for change orders. Best of luck to you.

malba - It sounds like, for some reason, there is a disconnect in the lines of communication and relationship between you and the GC for which no one is to blame. It happens. You have probably made the right decision for yourself to not proceed.

When you start talking to other GC's and if you have more questions about how the relationship should work I hope you'll feel like you can come back and ask. There are nightmare stories about contractors that come up here every once in a while and if we can help you avoid it we'll try or if someone can shed some light on expectations and responsibilities for you we'll try that as well.

In the meantime doing research on that part of the reno process might help.

malba2366:

Your GC does not deserve your business. He has foolishly only given a price (as so many here want) and has not sold the value of the service he provides.

Until he does his job, which includes sales, you two are better off apart. He's lucky you broke up with him now and not blown up with him in the future.

Joe, I think it's the other way around. The customer doesn't deserve this above board transparent (cheap) contractor. Someone who knows the price of everything and the value of nothing isn't going to fare well in the contractor jungle. I predict massive change orders to be paid for ahead that will end up costing far more than the first guy.

Ok, I had to throw this in...

First off, the OP deserves his/her opinion. Calling the OP foolish etc is uncalled for. Everyone has an idea of how they want to spend their money and just because it is not the same as one of ours, does not make them wrong. They choose how to spend their hard earned money their own way.

Now, as for whether the GC is "responsible" for the appliances or not, that is debatable as... what happens if the electrical or gas is not in the right place? Or what happens if the stove does not fit well? The GC would have to come back out and sand down some granite or something. They could just as easily say these were the specs you gave them.

Now, is that worth another 4k? maybe not.

I also propose this idea... what if the kitchen was done.. and you flat out had not even decided on the appliances, but they were "standard sizes" and so he made a "standard" opening. You ordered them and installed them 3 months later (I know.. long time.. but to emphasize the point).. would you then call him back and say "hey, I ordered appliances and they cost me 30k.. come by and pick up a check for me?

Let's go a little further... you ordered appliances and paid 10k for them. You got them in and after a year hated them. You order all brand new appliances and they fit in the same spots but cost 30k. Do you call him back a year later and say "here's your check"?

If he had nothing to do with the appliances, ordering them, installing them.. etc.. then why the hell pay him?

I pay a GC to handle things for me. He is a GC so he can coordinate sub-contractors etc. He gets paid and paid well to do just that. If he installs things, I would imagine he would charge me more for that aspect alone. If he bought them, I have no doubt he would tack on a percentage.

If he had nothing at all to do with them but only built the cabinets to the specifications and you were told he would not come out to make adjustments, then he is done. Finished. You do not pass go,.. you do not collect jack.

That being said, you would be on your own if the specifications are off.. so I would fudge a little to make sure they are not too tight.

Russ

Russ:

It's always a good idea to read all the previous comments before you comment. Had you done so, you would have read where I have already explained the hazards of not having one person coordinating all aspects of a kitchen remodel.

Joseph, I read and gave my input. With all due respect, my topic did not address the "hazards of having one person coordinating " anything. I gave examples of my "thinking" on the topic, sooo.. thanks?

Aaahhh you thought I meant you in the "foolish" part? I did not...

Russ

You are spending a very large amount of money on this remodel and you need to be comfortable with all aspects regarding the materials and services for your remodel. Since you do not agree with how the GC has priced his services, you are right to find another contractor.

From my understanding of the above comments, the contractor's approach and price seems reasonable. Given that he has great recommendations and reviews, it sounds like he will have no problems finding clients that will appreciate his skills and accept his methods.

There is no right or wrong answer here, just agree to disagree and concentrate on finding a GC who is a better fit for you.

Malba, I'm not sure you got an answer to your original question. If you haven't already decided against using this contractor, why don't you go back to the friends who recommended him and ask them how things worked out. Were they happy with the overall price that they paid? Did they think it was fair? And would they hire him again?

Consider the 12% like insurance, it's there if you need it, pray you never do, but keep paying the premiums.

You're not dealing with a $900 Frididaire here. Built ins have very specific manufacturer requirements that impacts many different trades. You HAVE to have someone coordinate all of those elements, or you will be paying for expensive paperweights.

As you can probably see, there's no one answer to the "is this normal?" question. Regional differences may account for some or most of that, maybe simply different business models as well. It only matters that you understand what you are paying for and how much you are paying. Then you decide if it's worth it to you.

We built a whole house on a cost plus contract, which I've read here is very "foolish." It worked out fine, but maybe because we had a very honest GC we trusted. And he trusted us not to nickel and dime him. His markup was 12% on the materials and subs he "was responsible for." The going rate in the area had been 15-18% before the recession. We hired him just as it seemed we might be coming out of that, but he still wanted the job, so was competitive on that end. We agreed that we would not be hard-nosed about the schedule, as we are not moving there for a while. So we offered something in return. He has been able to do other projects before ours was "finished," which is not something people want in a kitchen remodel!

He was fine with us ordering and paying for appliances and he installed them without marking them up (at his usual hourly rate.) We knew what we wanted and where to get it and had them delivered on time. With countertops, for example, he arranged it all and we just paid a total that had his markup included. I don't think that fabricator would even have talked to a walk-in.

There were a few other things he let us pay directly (his idea to save us some $$): tiling and foundation/excavation, driveway construction. Honestly, every time I had to deal with the subs myself, I came away thinking "man, he earns his %!). We worked directly with our cabinetmaker and paid him directly, too. I do agree appliances are a little different, but the main thing is that you both understand and agree to what the plan is.

Sophie - Agreed. Many of us would have someone assist start to finish so the responsibility is on them, not us. That way we know it is done right and if it is not, we can go, "your problem, not mine".. heh

I think the OP is saying that if she is willing to accept that responsibility, is the 12% right?

I would say no.

BUT.. as many have warned, buyer beware.

Good luck!

Russ

Here's where I'm confused. I understood the value of paying the 12% to have the GC make sure the openings were correct and the hook ups were in the right place etc. But then, a few posts up, the OP said:

"I emailed [the GC] asking him if he will work with the KD and appliance store to make sure everything is correct before anything is signed off on and he said that he would charge additional for his time to do that."

So now he gets 12% on the appliances plus additional money for his time to actually coordinate anything? Am I reading that wrong? Because I'm a little baffled.

Well, if that is the case.. he was asked to "coordinate" then, "standard coordinating rates apply".

Case solved.

"Aaahhh you thought I meant you in the "foolish" part? I did not..."

Well I guess you meant me because I said penny wise and pound foolish.

What that means has nothing to do with the op being foolish. this is what it means: "(Describes someone who will go to a lot of trouble to save a little money, but overlooks large expenses to save a little money. Even in the United States, thereference is to British pounds sterling.)"

lol.. I did not mean anyone in particular.. I saw someone (and I am not going to scroll up and point fingers) being sorta harsh with the OP and I think I saw someone saying they were being foolish, so by the time I got down to the bottom of this epic.. I just remembered that aspect and added it.

Nothing to see here! not trying to be mean.. just enjoying a good healthy debate! ;)

Russ

A bit tongue in cheek....but I see this as benefiting from a regressive/flat tax, when a progressive tax might be more in line :)

OP would be paying a flat 12% for all items, with GC overseeing project. So, no matter how much appliances or other items cost, it is 12%.

Rather than appreciate that high-end customers could pay 15% or 20% (since they can probably afford it) and hiding that in the overall bid, the GC is coming straight out with the fee. And with high item/appliance purchases, that seems unreasonable?

Well, maybe it is....but to me it seems more than fair. There is no price break or discrimination for being able to afford high end items.

Again...being a bit of a smartie-pants, but I couldn't resist.

@lavender_lass

I like the concept of "tax" esp the regressive version. Seems like the idea that death and taxes are unavoidable implies that the tax would be on everything...although the exact percentage might vary by situation.

The contractor or the homeowner could have made an "offer in compromise" since we're talking about paying taxes

I think someone asked this question earlier, but I'll ask the OP again... Would you be happier paying 20% on everything except the appliances?

It really seems like the appliances are the sticking point with the OP. If the GC had just presented an estimate with 20% for overhead, profit and supervision, excluding appliances, all would have been well.