If the contractor is taking responsibility for the items, then a mark up seems reasonable to me. For example, I chose a marble slab. My GC paid for it, picked it up and delivered it to the fabricator. The fabricator went to cut it ad it shattered. My GC bought a new slab and ate the cost.

I bought most of the things on my allowances myself without the GC (i.e. tile, faucet, etc). Things the GC bought and arranged for incurred his overhead and profit percentage. We arranged for the countertop and cabs ourselves so he didn't take a cut of those but the rest of the subs were through him.

Our kitchen remodel is underway. We chose to go with a contract where we supplied all the non building materials and had everything on site so we do not have any allowances in our contract. Another contractor who we did not choose was more accustomed to working with allowances and being more hands on in the purchasing/coordinating of materials for delivery. Whatever overhead he was adding seemed to translate into a higher level of service/hand-holding that I think would have been nice but we didn't need because we were already pretty far along in our planning. I agree that it is hard to swallow uplifts on items you are willing to source and where you think that you can do a better job of shopping around. In the end, though, I think contractors charge what they are going to charge and if the uplift wasn't in your allowance arrangement, it would be in something else that is not so visible to you.

My contractor charges 15% P & O. That's how he makes his money. I really wrestled with this, especially when considering appliances, lighting etc. (and oh my gosh, flooring, counters.... it all adds up.) However, I also want to be fair to him and not nickel and dime him. I did ask if I could purchase appliances, lighting, and plumbing fixtures so I could get points on my CC. He gladly let me, but did still charge me the 15% P&O. I am fine with it. He has to pick up all the appliances, arrange for install, and take the hit if something goes wrong. I want him to enjoy working for me as much as I'm enjoying working with him!

What does your contract state exactly? You purchasing the materials yourself absolves him of any warranty issues for the products, including installation as you are assuming the role of the GC. But this all should have been spelled out in the contract before any work was started. Typically "allowances" are place holders meaning he is going to buy it, and you pick it out and he has reserved said amount for the product. If you choose a more expensive product you pay the difference. But again this all should have been spelled out in the contract before work started.

The contract was setup with allowances in place for flooring, fixtures, lighting etc. A few weeks ago I asked him if I bought the lighting out of my own pocket would I get credited back the amount for the lighting allowance, and he said yes.

What I don't like is if you go to a store to shop, and they won't tell you the price on something because they don't know what your contractor wants to charge you for it.

Wow Mike, your contractor has to make a living and put food on the table too. It's like if your employer said to you s/he didn't want you to get paid your agreed salary so let's decrease your paycheck so you'll get paid less for your efforts. The margin you are talking about for faucet, flooring, etc. pays for your contractor's time and overhead which should not be for free, and also so he can make a living.

So the contractors do not make any money on the labor they charge you? I always thought that the labor cost was money that paid the contractor, and put food on their table.

Maybe I'm misunderstanding the system here. I was under the impression that if my contractor hired a plumber and my contractor charged me for that work, that maybe the plumber actually got 75% of what I paid the contractor(or some other percentage), and 25% went to the contractor who hired the plumber.

I would never have agreed to "allowances"! My KD/contractor was very flexible - if I found something, I bought it and he installed it as part of the contract price. I used the electrician who had originally installed my under cabinet lighting. He had built in a cost for that but then refunded it. I did not need a lot of handholding on anything other than the cabinets themselves.

We didn't have any allowances except for several things(like all the interior doors for example). But then I imagine we have a different type of a contract. We purchased everything ourselves, except for the rough materials. Couple things came from the GC as part of the contract-windows in the addition, shower glass surround, custom vanity-we chose the style etc but we worked with his subs on that (unlike other finishes we were free to purchase elsewhere)

Our GC explained to us later that had we chosen the "everything included' type of the contract, that was by the way much higher initial quote(no, we didn't save by choosing the other one lol)-we would have allowances on finished materials too. We still would have a say in it, but for example he would cover 5 dollars per sq f tile, and if we chose 10 dollars per sq f tile, we'd pay the difference. Or vise versa-he'd reimburse us had we chosen something cheaper that the cost he allotted for.

We had great independence in what we chose the way our contract was/is, but it took much longer(since you look longer for cheaper things trying to save, and also longer for the things that are very important personally to you, and you're ready to pay much more for them. Needless to say, you want both cheap things and expensive things to look and perform very nicely lol). Depends on the clients of course-I wouldn't call us the easiest clients. We had a certain style of a house we weren't going to fight, and a bit different needs=limiting from the very beginning. The moment you want something more rare-be prepared to invest much more, either in time or in money.

We are very nice though:) Pleasure to deal with:) Or so I think:)