3 factors that drive siding prices

Why does a siding contractor mark up the materials they sell? The answer is quite simple--any company needs to cover overhead and make a little profit to remain in business. A percentage of the price of any product you purchase goes toward those costs, but there are a number of different factors that can affect just how much markup you're charged.

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How contractors determine markup prices

Siding contractors providing estimates for your project need to cover their monthly overhead costs such as rent, fuel, vehicle maintenance costs, insurance, and other various items needed to keep their doors open and crews on the road. They pay for these overhead costs by marking up their labor prices and any materials they may be supplying for a project. If you purchase your siding from a distributor, the contractor may place a larger markup on labor, as they still need to cover those monthly costs. A few items that can affect your siding markup:

  1. Volume: If the contractor provides and installs a lot of siding each year, they may have a smaller markup on each job.
  2. Advertising: It's not true in all cases, but when a siding contractor has a large office and a fleet of fairly new trucks on the road, there's a pretty good chance their markup might be a little higher than a smaller contractor with an old pickup truck. However, they could cover their large overhead with work volume.
  3. Siding cost: If a contractor figures their markup on a percentage basis, you're going to pay more markup for expensive sidings.

R.S. Means Repair & Remodeling Cost Data estimates that overhead and profit can account for about 40 percent of your siding cost, but that may vary depending on your location.

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