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Daily Archives: 20-December-2015
Incorrectly Computed Discount Followed By Markup
A few years ago, I hired a tile installer to tile a bathroom I was remodeling. He was a talkative guy, and he casually mentioned that he had chosen not to make any money on his material – he would make his money on labor alone. He said that most of the tile shops he works with give him a 15% discount on material, which he passes on to his customers. Other contractors markup their material charge by 15% to bring the cost back to retail price – this statement bothered me because the markup should be larger than the discount. The math did not seem right to me at the time, but I did not raise any questions because I wanted my bathroom done. I did not think much about this math error at the time until I saw an article in the Journal of Light Construction (JLC) telling contractors that this is a math error that is costing them money. As I read the article, I realized that this is exactly the same error I heard my tile contractor make. Continue reading
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