Contractor Markup and the Cost of Window Installation: What You Should Know

How many times have you been cautioned about the tremendous markups a contractor may put on the windows used on your project? Don't believe that myth--while there are always a few bad apples in every barrel, for the most part contractors can be very fair in their dealings with customers. After all, a large portion of their work often comes from customer referrals. If you're gathering window installation costs, you may discover that contractors handle markups in various fashions and in many cases, the amount is just enough to keep their company afloat with a little profit.

Markups and the cost of new windows

A construction company has certain overhead costs to cover just as any other type of business. Depending on the size of the company, there may be vehicle costs, fuel, insurance, administrative salaries, rent, and many other types of costs involved in their daily business operations. There are several job-costing methods that allow the company to cover this overhead that may come due on a monthly basis--they can add a percentage onto their labor rates, they can markup the materials required for the job, or they can simply increase the total job cost by a certain percentage. If you're employed by a company, they may also use one of these methods to cover their overhead regardless of what they're providing--a product or a service.

When adding a markup to your window installation costs, the contractor may consider these factors:

1. Total cost of the new windows--if the cost is small, overhead might be a percentage of the entire job.
2. Number of windows being installed--a large number of windows allows a small percentage of markup to cover overhead.
3. How much labor is involved--higher labor costs might cover overhead and the new window cost may be marked up a very small amount if at all.
4. Price range of the windows--higher priced windows may result in a small percentage markup covering overhead.
5. Is there work involved other than the window replacement--a large project might result in overhead being covered by total job cost and little if any markup on the windows.

Getting estimates from at least three contractors for your window installation costs can be a good method for ensuring you aren't dealing with one of the few bad apples in the construction industry and may help to prove that large markups are just a myth.