Pricing Work With Project Prices For Tiles

[C.Vaughan]

Hi all

I have only been involved in supplying tiles on commercial jobs for about a year now. These jobs always have project prices for the tiles so everyone knows the cost of them and your profit margin when quoting.

I have always added my margin onto the total cost of the tiles (including VAT) and never had issues. I am VAT registered so can claim this back as well. However when pricing a recent job the customer is coming back to me saying my profit margin is too high and should only be added onto the net tile cost which is excluding VAT.

Does anyway know if there if this is correct and Ive been overcharging on previous jobs? Sureley there is a general rule.I dont want to look like Im having peoples pants down and as Im still fairly new to this supplying game its got me wondering

Any help is much appreciated

Craig

 

[peteablard]

Some large customers seem to be able to dictate their prices. Due to the fact they buy a lot of tiles someone will always agree to supply at a low margin.

 

[Perry]

you shouldent be making a profit on the Vat. IMO unless you can get HMRC to pay you for the work you have to do free of charge for them.

 

[Chalker]

You can make as much profit as you like.
But if you add your percentage to the figure after fat you will be charging more.

Example. Cost price, £100 plus vat = £120.

If you wanted to make 20% profit and you are vat registered.
£100 + 20% profit = £120 . + vat =£144.

If you added profit to the figure after vat.
£100 + vat = 120 + 20% profit = £144. + vat = £172.80.

Quite a difference.

 

[jimthetiler]

tut tut

 

[Tile seller]

Yes, profit margins first then add on vat. I find it hard to understand why you would let your customer know know how much you've paid for something? Seems odd.

 

[WetSaw]

You haven't got very good accounting practices and I'm surprised you've not been pulled up on this before. VAT has nothing to do with your margins or profits and should be out of the equation.

 

[C.Vaughan]

Thanks. Its not case of me letting them know. They already know the cost of the tiles as all the info (tile spec plus manufacturer) are on the schedule of works. The manufacturer and architects agree a special rate for the tiles and set it as a project price so everyone is aware of the cost. Basically they can easily work out your profit margin!