This started as a couple of lines but I got carried away...
I suppose things have changed over recent years... householders can now purchase the same items as tradesman at the same prices without setting up accounts (e.g.
Screwfix etc.). A tradesman would once get a £100 rrp item for £70 trade and make £30 by charging the customer rrp. Primarily due to the Internet, trade prices are now available to all to a degree and this makes marking up more fraught.
If a plumber buys a basin then he is adding a service that needs charging for. He fetches the product (or arranges delivery); he provides cashflow to buy it; he becomes responsible for replacing it (plus associated labour/time costs) if it arrives damaged/faulty/wrong part etc. and there is also a grey area of who is to rectify a problem at some stage further on down the line). The questions are:
What to charge for this service (mark up)?
What information to give to the customer?
Shops DO NOT provide the customer with information on what they paid for the goods. However, there is a difference: we all KNOW that the price a shop quotes INCLUDES the shops overheads (labour, lighting, insurance, advertising, owner's car etc.). We know that we should shop around. Now if a plumber quoted an overall price for the job and does not specify the costs of materials separately then one can argue all is well with the world. "This is what it will cost you to have brand X basin fitted in your bathroom".
But if a plumber quotes for "materials" or "boiler" then I believe that the situation has changed somewhat. It can reasonably be assumed that a customer might think that "materials" means "materials" and "boiler" means "boiler" and an element of doubt is introduced. If "materials" means "materials plus a holiday for my mate Geoff" or "materials plus £200 because you look a bit old and daft" then the customer maybe has a right to know this. If "boiler" means "boiler plus £400 because it might go wrong and I'll be there like a flash if it does" then maybe the customer should be aware of this situation. Of course this is a moral, rather than legal argument. Imagine the scenario: your old mother has just had a boiler installed and as well as the labour the cost of the boiler was £1500. YOU know that it sells for £1000 all over the place.
Mother: "But the nice man says he will come back if it goes wrong".
You: "And do you pay him per hour if he does come back?"
Mother: "I don't know"
You: "How long does this arrangement last? Are parts included? What if he's too busy... on holiday? Did he sign anything?
Mother: ...silence...
As a customer... if my plumber fitted a basin for me and charged me for materials (inc. basin) I would expect him to be "reasonable" and would not wish to check him out on this. A reasonable price is difficult to determine but would probably be defined, for myself anyway, as "somewhere between what he paid for it and what one would generally pay, at most, for the same thing, from a trustworthy source" PLUS a percentage to cover time ordering or fetching/researching/knowing what to buy/chance of faulty or wrong part delivered etc.
If he got the basin for £50 and charged me £100 and it was for sale in B&Q at £60 then I would feel that a certain degree of trust has been lost (quite a lot of trust at that price!). But if he charged me £60 and added 20% on (now £72) I would consider this reasonable. His contrribution towards his overheads is £22.
The difficulty is when Online Supplier sells at £50 and Big DIY Store sell at £80. Of course plumber buys for £50 but does he charge £50 plus 20% or £80 +20%. One could argue that were a householder to do the job themselves they would most likely travel to Big DIY Store so would pay the higher price so let's use this as the starting basis. But nowadays there are a lot more savvy consumers out there and they might find this method rather hard to swallow. The same applies to small items - I have seen 15mm iso valves at £3-50 and £1 - which price to charge the customer whilst retaining a feeling of integrity.
I feel that a good way to go is the amount I paid for it plus 20% and to add this fact to my Terms and Conditions.
If the higher price IS covering some kind of longer term warranty then this really needs specifying i.e. price includes warranty to XXX specification. Just whacking a few hundred pounds on to a boiler without specifying why is not how I would do it. I would specify in my Terms and Conditions that there is a 20% markup for reasons mentioned above and £X or X% added for a warranty described as <insert details of warranty>.[/i]