6 markups that increase window installation cost

July 18, 2011

Businesses have to make a profit, or they don't stay in business. Few of us have a problem with that, unless the business is padding its profit margin on our nickel. So when you are negotiating the price of goods or services, arm yourself with knowledge and you'll be in a better position to get the best deal.

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An excellent example of this is getting replacement windows for your home. There are many facets to your window installation costs, not the least of which is the mark-up on materials and labor.

6 factors that add to window installation cost

The first thing to understand is that not all markup goes to profit. Companies have expenses that must be covered, and the markup helps them do that. So what are the things that make your installed windows so much more expensive than the price in the manufacturer's catalog?

  1. Materials: Besides the windows themselves, the installation contractor needs new insulation, caulking, shims, nails, and other hardware.

  2. Labor: The contractor has to pay his employees, plus payroll taxes, medical insurance, vacations, etc.

  3. Overhead: Advertising, insurance, commissions, warranty reserve, office space, supplies, equipment, labor and other overhead items are all factored into each job.

  4. Transportation: Gas and other vehicle operating costs to get the materials and crews to the job.

  5. Miscellaneous expenses: Dump fees for disposing of old windows; time spent on measuring and estimating, obtaining permits, arranging inspections, and other tasks not otherwise classified.

  6. Profit: Here is the one place you have some negotiating power. If one contractor is happy with a 20-percent gross profit margin, and another wants 30 percent: That will be reflected in the bids. If all else is equal, including materials, time and warranty, then go with the low bidder.

You can also try to save money by purchasing the windows yourself and having a contractor install them. But keep in mind that a contractor probably gets wholesale pricing, so even with his mark-up, the windows may cost you less, if he buys them for you.

You can also offset some of your window installation cost by purchasing Energy Star® rated windows to take advantage of tax rebates. Energy Star® tax rebates only apply to materials costs, not installation.

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