A contractor's journey to self-mastery requires discipline, integrity, and respect. Welcome to Hammer and Grind. And welcome to the Hammer and Grind podcast, the podcast built for contractors to help maximize profits and get you off the tools before burnout or bankruptcy happens. I'm your host, Brad Hebner, and I'm here to help you on your journey to self-mastery. Make sure you check us out on our social media platforms, TikTok, Instagram, Facebook. Just search for Hammer and Grind Podcast and you'll be able to find me there. Consider joining my free Facebook group called the Contract Your Profit Blueprint. I created this free group to give you as much information as possible to help you in your business. I go live in there once a week, tons of content to help you in your business. Now, if you want to accelerate the success, consider joining my paid coaching group called The Profit Club. In there is a great community of contractors all willing to share information and help each other succeed, as well as hundreds of hours of training, coaching calls, everything you need to accelerate your business. If you want to learn more about that, you can find out more information on hammerandgrind. com forward slash The Profit Club, or just send me a message and I'll be happy to share that with you. Now, let's get on to the show. All right, welcome to the Hammer and Grind podcast. This is episode number 105. Should you provide materials? And the short answer is yes. So thanks for hanging out with me on this podcast. Now, we're going to dive into some of the different reasons why you need to be providing materials for your jobs. This came about because of a conversation that was going on on TikTok. My buddy Jim Mortensen on TikTok was doing some, he's a contractor and he was doing some videos on materials. And there were people that were complaining about materials and what happens if you buy materials and there's extra leftover? Do you leave those with the customer? Do they get to keep those because they paid for them? And this whole rigmarole about who owns the materials and all that. So thanks, Jim. for providing this podcast topic today because it is something that is actually valuable. I actually just talked with a new client in the Profit Club last week who hasn't been charging materials or providing materials, I should say. And he's doing high-end work. And so there's a lot of money being left on the table in terms of profit and markup. However, really what I want to talk about today is why you should be providing materials from a quality standpoint. not just from a profit loss standpoint, but from a quality of deliverable standpoint. And so you have to understand that if you allow the customer to provide the materials, yes, they're going to save money, right? That's like the number one reason why a customer would want to provide materials is so they can save money. That's their belief around the whole thing. And to some extent, that's true. They are, saving some money because they can go buy it cheaper and you're not going to necessarily be able to mark up that material. However, even if someone was providing material, I could still add markup on my labor. I can just add more markup and essentially make up the difference of the materials. So I could sell you a job, a $10,000 job, and you're going to save $5,000 by buying your own materials. But I'm just going to add an extra $5,000 on top of the price to make up for the difference of not marking up materials and sell you that job for $15,000. So that's not necessarily true that they're going to save money. Now, if you're a subcontractor and you work for a general contractor, the general contractor wants to provide the material so they can save money because they don't want to pay your markup on it. Right. And subcontractors are a slightly different scenario than, say, a remodeler or a landscaper or general contractor who's working for the public. Those are a little bit different scenario. But even as a subcontractor, I would still want to provide the materials, even if I agreed not to mark up the materials. So like if I was a tile subcontractor and I work for a general contractor on, say, new homes. I would still want to provide the materials, at least all of the substrate and all of the prep materials, the final tile that's debatable. But even then, I would want to provide the materials because I want to control the outcome. I want to control the schedule. So if a contractor is like, this is the tile we're using. We're going to use this Florida tile brand tile. You know, this color, this model, this is what we're doing. This is the quantity. I'm going to put it on my account. I'm like, cool. We'll put that tile on your account, but I'm going to order the tile and I'm going to tell when it's being delivered or I'm going to go pick it up. I'm not relying on you to tell me that the tile was at the job site because I don't want to go to the job site on a Wednesday morning to start a job and the tile is not there because, you know. The GC thought that he called and scheduled it, and he scheduled it for Thursday to be delivered, not Tuesday. And so now you just wasted a whole day because the tile is not there. And then you got to call and make all these arrangements and everybody's hair is on fire and you waste four hours out of your day. No, I don't want that headache. I make my profits in my schedule based on my efficiencies and my ability to control. the outcome of what I do. And so the more you let someone else dictate that in terms of materials and such, the less control you have. And you're at the mercy of some $12 an hour employee who works in the warehouse at the tile store who forgot to add on one thing in the order and now you're screwed. Your entire profit margins can be wiped out because of a $1 $12 an hour employee forgot to order something. or forgot to put it in there when they delivered it. This has happened to me multiple times. When I first started, I didn't care if people bought materials. Sure, yeah, you want to buy your own vanity? That's cool. We show up to do the job. The vanity is from Lowe's. It is a furniture-style vanity, which if you know anything about installing vanities, do not fit up against walls. It's one of my pet peeves with all of the stupid vanities that are sold at the big box stores is because 90% of them... are not designed to go up against a wall. They're designed to be in the middle of a wall, yet 95% of bathrooms have one or two walls that vanities butt up to. And why this even exists, why this happens, I have no idea. I've even created a YouTube video for my business that told customers, if you're going to go buy vanities, you need to watch out for this because it doesn't work. You got a furniture-style vanity cabinet with a round corner, leg on the edge. I don't know if you know anything about round and finials and different tapered columns and stuff. They don't butt up flat against straight walls. So you have these gaps. Now, I digress. That's what happens when you give control of materials to your customer. You're losing your ability to deliver a high quality product. Now, there's the price side of it where they think they're saving money. And then there's the quality side of it where you're going to be able to deliver a better value product. So most people don't realize this, especially your customers. But if you use it like Florida Tile, for example, and there's lots of other brands. That's just one that came to mind. You can go to a professional tile store like a Local where I'm at, we have one called Louisville Tile. That's one of them. You can go there and buy Florida Tile brand tile. And let's just say it's $3 a square foot. I can go to Lowe's and buy a Florida Tile brand tile. It's the exact same tile. And it's $2 a square foot. And this is like the commodity I've talked about with gas. Why would you pay a dollar more for one gas station? Then the one next to it, that's the dollar cheaper. So your clients thinking they're saving money. Oh, it's a dollar more. We're doing 500 square feet. That's $500 we're going to save by getting the tile from Lowe's versus from Louisville tile. That's not true because a lot of these companies have grades to the tile. And so the level one or level two grade tile goes to the tile store, the professionals. And the level two or three, grade tile goes to the big box stores, the do-it-yourselfers. It's not the same quality tile. So when this tile comes out of the manufacturer, they do their quality test. And if it doesn't fit within a tolerance of, say, size or thickness, then it gets graded as a second or third. And it gets shipped to the big box stores where the number one grade, the highest quality stuff goes to the specialty stores. And so, yes, you're paying a dollar more per hour. I'm sorry, a dollar more per tile per square foot. But it's a better quality tile where the sizes are all the same. If you've ever installed tile, and this is for anything, it's not just tile. I'm just using it as an example. But if you've ever installed tile and it's not the same size, like if it's 12 and 3 quarter, it's supposed to be 12 and 3 quarter and you get some that are 12 and 15 16s and 13 16s. five-eighths, and all these different sizes, it does not make for a good quality install. And so if I'm a tile contractor and I rely on the general contractor or I rely on a customer to provide those materials and they go to the cheap place and come back and give me a stack of tile and I start installing it and the sizes are not the same, I don't give a crap how good you are at your trade. you are limited by your ability to make it look good based on the quality of the product. And so if you install this floor, let's say it's a floor, and the tiles have variances, yes, a good tile setter can rearrange things and make the best that they could possibly do with what they have, but they still can't make a turd look like a shiny chrome turd. It's still going to look like a turd no matter how much you polish it. And so if you do that and the grout joints aren't evenly matched up, what are they going to say to you? They're going to say, hey, this job looks like crap. And you're going to say, no, it's the quality of the tile. And they're going to say, that's bull crap. There's no variance in tile because they don't know any difference. They don't understand it to the level of detail that you understand it to be. They may throw a tape measure on a tile. And it's a 16th variance from one to the next. And they just see that as it's good enough. Like they don't realize that a 16th of a variance can throw you off a half of an inch over 12 foot. They don't understand that. And so you look like you did a crappy job simply because they provided you with an inferior product. And then they're either going to make you redo it or they're going to live with it and then bad mouth you because of it. That's what happens when you let the customers control the products and the materials. Think about it like this. If you went to a gourmet burger joint or a steak, it doesn't matter, steakhouse. Let's say you go to a gourmet burger joint. It's like $20 for a burger. And you get there and you say, hey, I brought my own patties. I want to provide my own patties. So give them to the chef and have at it. And for whatever reason, the restaurant's like, okay, no problem. So the chef cooks up your patties and throws them on the burger and he comes out and you eat it and it's not very good. And you're like, the chef did a crappy job. Why couldn't you make my patties taste like all the rest of your burgers that I've had here before? And he says, that's because you brought us patties from McDonald's. And you expected us to make them taste like the black Angus beef patties that we get from local farmers and stuff that are fresh. And then you get pissed off at the chef because it doesn't taste very good. That's literally what you're doing when you have your customers provide materials. You're giving up the quality of your product. And by quality, I don't just mean the end product. I also mean the experience. If you have a system created with your vendors, like I did, I had the Louisville tile, they have their own sales reps. I had a relationship with a specific sales rep. And so we understood each other. And so when I sent my clients in there, I would send them a spec sheet or an allotment sheet of what they're allowed to pick out based on the budget and what they wanted. And my sales rep knew not to sell them a higher price tile just so she could make a commission on it. She knew that this is the budget. It's $3 a square foot. It's $5 a square foot. It's $20 a square foot. And she has that information. So now she can guide my clients to make a decision based on their budget or let them know that if they go with a higher price tile, it's going to be over their budget. She's an ally to my business. She's someone I can work with. She can meet with my clients. And then after they leave, call me or message me and say, hey, just so you know, they changed their mind about what they wanted. This is what they're going with. And she's giving me a heads up. That's a relationship. You cannot replace that from the $12 an hour guy at Lowe's who's helping them pick out tile, who's never laid a tile a day in his life, has no idea about tile, but he just works in that department. You cannot take those two situations and replicate them by simply having them pick out materials versus going through your vendors and your processes and your relationships. It is not even remotely close to being the same. Also, they could save $250 on the cost of the tile on a $30,000 project. You're doing a $30,000 project. They want to go buy tile at Lowe's so they can save $250. That's like, I mean, it makes no sense to me whatsoever. Now, I'm in some tile groups, some tile Facebook groups. And these guys, the tile guys, if you're a tile guy, I might make you mad here. I know you're very sensitive guys, but just bear with me, all right? A lot of you don't want to provide materials because it's a hassle. Because you don't want to deal with all that. And again, you're setting yourselves up for failure with the customer. You're losing out on profits. And it doesn't provide a good service to your customer. Most people have fewer time available. The last thing they want to do is have to go out in their Tesla and go to the tile store and load up 200 pounds of tile in the trunk of their car. and bring it home and put it in and unload it and put it in the bathroom for you. That's not providing value to your customers, guys. Do all that. Provide a turnkey service and then charge a premium for that. Make your client's life easier by providing turnkey solutions. This is... I mean, it just blows my mind why contractors don't want to provide materials. It really does. Now, I was talking with my new... my new client, he's probably going to listen to this. And he said, well, you know, the reason why I don't provide materials is because they can go and price shop and they have access to all the materials already. They can go see what it costs. Yeah. Yep, they can. But will they do that? No. Most clients are not going to go price shop materials because they want to make sure you're not ripping them off. That is not what most people do. They have better things to do than to try and control every single dollar that's being spent. And if those are your clients, then you have terrible clients and you need to upgrade your clients. Because most people do not want to deal with all of that crap. And even the ones who know that you're marking up materials don't care. They want a solution to their problem. They want their bathroom remodeled. They want their backyard landscaped. They want their roof replaced. They want their fence installed. They want a driveway poured. They're not saying, I need to save money, so I'm going to do all this work myself. An overwhelming majority of people do not care about the pricing. That's just a belief that you have, which is not true. for the overwhelming majority. I have enough experience dealing with people to understand human behavior. Now, here's the caveat. If you suck at your job, if you suck at running a business, and you present yourself as someone who's incompetent in what you do, then yes, they're going to have more control over what you're doing because they want to make sure you're not going to screw it up. This is why having a professional appearance and having systems in place make it seem like you know what you're doing. But if you suck at that, then people are going to say, I really like this guy. He seems like a really nice guy, but I don't quite trust his ability to control this whole thing. So I'm just going to put a little bit of pressure. I'm going to put my thumb on him just a little bit. just to keep him in line to make sure he doesn't screw stuff up. I'm going to micromanage him a little bit because I want him to do the work. I just don't fully trust his competence level. So if you are having people constantly want to check and double check and micromanage what you're doing, it's a very good indicator that your competence is not where it should be. Now, I'm not saying that you, as a human being, that you're... like a crappy human being. I'm saying like your professionalism and how you portray yourself. I know a lot of contractors who have very good branding. They have very good image. They have very good, like it looks like from the outside, this company is killing it. But when you dive in their processes, it's they're, they're all over the place. Like they're a train wreck, right? They just, they figured out the marketing side of it, but they haven't figured out the, the, the production in the, in the. efficiency side of it. But if you have any level of incompetence through professionalism, through your marketing, through how you talk to people, how you present information, how you organize things, it's going to make them nervous. And so people hire people based on the level of certainty that they have to achieve that project. There's different levels of this. Right. If you're going, if I just needed somebody to come and put mulch around, like say I have landscaping in front of my house, it's time to mulch. I've done it myself for the last 10 years. This year, I don't really have time. So I just need a contractor to come in and put, you know, a yard of mulch in my, in my beds and that's it. I don't really care. I may not care about the quality of how the mulch is put in because it's not that important to me. So in that situation, I might be more likely to go look for somebody who's new, who's just starting out, who's hungry, but doesn't really understand how to charge, doesn't understand their value. They haven't taken my coaching yet. So they don't understand how to properly price things. I'm going to be more likely to hire someone like that because it's not something that I care about. If they screw it up, it's not a big deal. I can go out there with a rake and probably do it myself. I don't have very much value in that. That being said, if I was going to have a new driveway port, I'm going to tear out my driveway and put a new one in or add to it. I'm going to go after a more experienced, more expensive contractor because that's a permanent thing that if it's not done right, will look like crap forever. So I want someone who has the experience, who's been in business, who's going to be more expensive. And I'm willing to pay a premium. for somebody to come and do that because of that level. So in your business, when you're providing materials, there's different levels to it, right? I would allow my customers to pick out things, like pick out selections, but they had to go to the places I told them to. And some things matter more than others. So like in bathroom remodeling, I really didn't care about lighting fixtures like vanity lights. Those are not that much of a difference. I mean, I know electricians would probably argue with me. And yes, there is a difference in quality between, you know, different manufacturers and stuff. I get that. But there's not much of a difference in the outcome of the quality, like the, what's the word I'm looking for? I guess quality is the word I'm looking for, of the product itself. So I would just tell them, hey, go to Lowe's. You can just go to Lowe's and pick out what vanity lights you want. Now, I also had higher-end clients. We have a Ferguson's here, and I would send them the Ferguson's too if they wanted to pick everything out there for convenience. But certain things in the project, I didn't really care, like where they got their towel bars at. I didn't care about the towel bars. They can get those at Lowe's or Home Depot. The lighting, they could get it at the big box stores, or they can go to the lighting specialty place. Things like that were not as important. But like vanities, countertops, tile, you know, doors, windows, trim, plumbing fixtures, those all had to go through my preferred vendors. And I didn't give them the option to go anywhere else. Now, there's always like that one-off case where their cousin owns a plumbing store and they want to get their plumbing from that place, right? Or their cousin. whatever owns the tile place, whatever. Like I can make concessions on certain things if I want to work with those people, but I'm still getting my markup regardless. So if they go buy the materials and they, and they buy $3,000 worth of tile from their cousin's store, and I don't have any control over that, I'm still adding $3,000 of markup on my project for that tile. So that's the second thing I want to talk about with materials. They want to provide materials because they don't want you to mark them up. On this TikTok with Jim, he had a person that said, a lot of the contractors have accounts at these places and they get a discount. So if the contractor goes to, let's say, the tile store and he gets a 10% discount off retail. then the contractor just keeps that money and then charges the customer full retail. So it's like they're making an extra 10%. And I commented and I said, no, we take the 10% and then mark up 100% on top of that. You don't get the discount, guys. The customer. The customers don't get the discount. That's not what that's for. Your job is not to bid projects with your pocketbook. It's their pocketbook you're bidding with. And if they want to be cheap, then they're not your customer. Quit taking on jobs that they want to provide the materials to save money because you think it's easier for you or because you need to work. That's the number one recipe for setting yourself up for failure. Provide the materials so that you can control the outcome. Also, so you can make your markup. But I don't need the materials to make my markup. So the markup, marking up materials, It's just an easy way to add profit to your business. I don't need to mark up the materials at all. If someone's freaking out and they want to see all the numbers, that's cool. I'll just put a line item in the thing for materials. $10,000. That's my cost. Cost me $10,000. You're getting in for $10,000. Guess what? I got another $10,000 of markup somewhere else in that estimate that they don't know about. I'm still marking up those materials regardless. So the markup is just an easy way to mark it up against materials. If you have labor and materials, your cogs, you just take it times two. That's your markup. It's easy. It's just easy math. When it comes to math, I suck. I joke I got into construction because I'm terrible at math. I hate math. I have to use a calculator for everything. But that's why it's easy math. I don't need to mark up the materials. So this idea that your customer is saving money by providing materials. It doesn't help anything because you still should be marking up the materials. Even with allotments, with bathrooms, I have a worksheet, an allotment worksheet based on our conversation and what they want. It's like, here's so much for square foot for tile, so much per fixture, for lighting fixture, for plumbing fixture, for toilet, for doors, trim, tubs, like all these different things in the bathroom. I have allotments. And so based on our conversation and what they want in the pictures and, you know, they want middle of the road quality stuff. I put in all of my allotments that I use and I give them that worksheet. And let's say the total on that worksheet of all the selections they have to make comes out to $6,000. Now I don't put in there like drywall, two by four screws, glue. Like I don't add that stuff. It's just the selections they have to pick out. And I say, this is your budget. This is your allotment. If you want us to stay under $30,000 for your project, you have to stay under these allotted amounts when you make your selection. So if I put $4 a square foot for floor tile and you go to the tile company and you pick out a $5 a square foot tile, you just added a dollar per square foot to your budget. which means if you had a 500 square foot worth of tile, you just added $500 of cost expenses to your overall budget. So now it's $30,500. Or if you go under a dollar and you get $3, you save yourself $500. If you want savings, this is where you can get your savings is in your allotments. But guess what? The total is $6,000 based on those allotments. Whatever they pick out, if they save some money, and the final price is $5,000, they end up saving $1,000, I still have a $6,000 markup in my estimate. So they saved $1,000 off what they picked out, but I still got my markup. Now I can choose if they go over, I can choose to add more markup to that, or I can leave it where it's at. That's my choice. Usually... The allotments come in right where they need to be. And we're only talking a few hundred dollars difference. So if they go over $200 or $300 on their allotment, I'm not that strapped for cash that I need to add an extra $200 or $300 worth of markup because I already have my market figured in. If they go under and they save that money, I keep it where it's at. And then what I could do with that money is I can actually give it back to them in the form of a gift, in the form of gift cards. However, I can use that money now to thank them for the project. But it's not their money to have and decide on. They are agreeing to a price. The price was $30,000. Your decision is yes or no. It's not yes, but we want to provide all the materials so we can save money. It's yes or no. That's it. That's the decision they get to make. If they say, well, we don't want to use this tile company because we don't like the owner. We want to use this other one. And you've never worked with that company. You don't know anything about them or what they do. It's your decision to decide, do I want to risk the outcome of this product? Because I have a system in place that produces high quality work. Do I want to risk that just to make my customer happy so they can get it over at this other place? That's your decision to make. And sometimes it's worth it. But it's still a risk that you have to make. I tell my clients, or I told my clients, when they said, we want to get stuff here, I say, unfortunately, we don't do that. We have to go through here. Is that a deal breaker? And sometimes they say, well, I mean, we just, you know, we wanted to go through there because we can save some money. You know, we get a discount through our work, blah, blah, blah. And I could look at it and I can make some concessions if I want to. Or if I feel like it's going to be a pain in the butt, I just say, no, I'm sorry, I can't do that. And if I lose the job, I'm 100% okay with that. It's not my job to make everyone happy so that they hire me. That's operating out of desperation. When you operate out of desperation, you take on jobs that you shouldn't take on because you need that work. When your phone's ringing off the hook and your calendar's booked out for months on end, you can simply say, you know what? I'd really love to work with you guys and do this project. It seems like a fun project. Unfortunately, we don't deviate from our vendors because that's how we control the high quality product and experience that we deliver to you. And we don't compromise on that. So if it's going to be a deal breaker that we have to use a different vendor, unfortunately, we won't be able to help you with your project. And that's it. That's how you approach that. Guys, you're in control of this. This is your business. Enter Brad's rant section. This rant section is brought to you by RPG Coffee. Sorry, I'm just joking. No, seriously, get some RPG Coffee. This is your business, guys. Seriously, this is your business. Why are you letting your customers dictate to you how to run your business? It's crazy to me. You should be in control 100% of your business. You can't go to the... the vehicle manufacturer and say, Hey, I don't want to use alloy. I want to use steel. They're going to be like, Who the hell are you? How'd you even get in here? You don't get to control that. Your customers don't control how you run your business. You're not employees of your customers. It is your business that you built from the ground up. You took all of the risk in your business. Therefore, you get to dictate how what and when you use the materials. It is not your customer's position to dictate that for you. And if they think they can, they are not your customer. End rant. Guys, use the materials for profit and to control the outcome of your business. It is critical. It's absolutely critical that you control all of this. The more you control it, the better experience people have. The more value you provide, everyone's happy. The more higher reviews you get. This is not like I'm not making this up. The more people pay for stuff, the more they appreciate it. That has been proven through science. The more people pay, the more they appreciate it. I've helped out contractors for free and they don't take my advice and they don't execute and they don't appreciate it. And I've given the exact same advice to contractors who've paid a lot of money and they have success with it and they appreciate it. The only difference is they paid more money. It was free versus paying money. It's the same thing with doing consultations. When you have skin in the game, you appreciate it more. If you go buy a Ferrari for $280,000, you're probably going to take care of that car more so than... a $20,000 car you bought, Camry or whatever, a used Camry. You're just going to appreciate that car more because you paid more money for it. Value is an indicator of how much price is paid. It doesn't mean that if you pay a bunch of money that you're always going to get great value. But if you want to have great value, you need to pay more money. In other words, your customers need to pay more money. When you charge appropriately, when you mark up your materials, and you provide the materials, you can now provide a complete turnkey service. And someone like myself, who's a busy businessman, I don't want the headache of dealing with all that crap. I want to say, this is what I want. I want this done here in this time frame. And if you can make it happen and it's done right, I'll pay you whatever you want. And there's a lot of people like that. Start looking for those people and get rid of the people that want to provide materials. Guys, that's all I got for this episode. I hope it was valuable. Do me a favor. If you listen to this for the first time, go leave me a review on your favorite podcasting platform. It helps to push it out to more people. The recommendation is just go leave a review, an honest review, as long as it's a five-star. I'm just kidding. Leave me an honest review. And I appreciate it. Share it with a friend as well so we can get the word out to as many contractors as possible. Go check out my free Facebook group, the Contractor Profit Blueprint. I got lots of exciting things happening in there. Some changes coming up, the pipeline, more information. So you're going to want to check out that. And I just released a brand new guide, Eliminate Tire Kickers and Get Paid to Do Estimates, a no BS guide for contractors to get paid what you deserve. And this is a 20-page guide that I put together. that helps you explain the entire sales process. Disc profile, how to talk to different disc people, different personality styles, what to actually say, how to talk to them, how to pre-qualify customers, the understanding of the selling framework, how to think about sales. It's a complete guide. You can get it for free. I'll put a link in the show notes and you can take a look at that. But yeah, guys, I appreciate you listening. Go check us out on all the social media platforms. You just search for Hammer and Grind Podcast, TikTok, Instagram, Facebook. And like always, guys, until next time, remember, profit is not a dirty word.
