See our last post for an in-depth explanation of the various components that go into a contractor’s quote. These include the direct costs to complete each job (cost of goods sold), the contractor’s overhead, and the company’s profit.
In our last article, we ended with the question: if every contractor has so many hidden costs to consider when quoting a job, why isn’t EVERY contractor expensive? Perhaps a better question is: why are contractor quotes so varied?
We have all experienced some version of “you get what you pay for,” but is that really all that’s going on here? You might be thinking, I know a guy who does good work and is way cheaper. Let’s take a look at this.
Simply put, there are three reasons you might receive wildly varied quotes for the same project:
The quotes are not apples to apples. The contractors you are considering have proposed different solutions to your project, will use different materials, or otherwise are not including the same scope of work in their estimates. Significant variability in quality of workmanship is an example of comparing apples to oranges. So is comparing a contractor who is licensed and carries insurance to one who is not. The purpose of a contractor’s license is to provide you, the client, with legal and financial recourse should things go south.
Many contractors do not factor in all of their costs of doing business. As we explored in the last article, there are many hidden costs to running a contracting business; if these are not factored in the contractor is slowly running themselves out of business. Really, Mira? Yes. Now, I will admit, many contractors stick around for years while under-pricing their work. But other parts of the experience you receive as a client may suffer. Is that contractor always responsive when you need them to be? Do they stand behind their work when problems arise? Do they honor their appointments with you? Do they seem to be habitually in a rush, running out the door leaving loose ends or a mess behind? These are important aspects of the experience you are paying for that will likely suffer when your contractor does not account for all of their costs of doing business, and has to chase new jobs to stay afloat.
Every contractor has different costs of doing business. Some contractors are truly a one-person operation and intend to stay that way. They have a much lower overhead cost overall, but they also cannot get as much done, so their overhead per labor-hour will be what it will be. Some contractors rent a large shop, have shiny wrapped trucks, and a showroom. Obviously, their overhead is much higher, but it is spread over many jobs and employees, so per labor-hour it will be what it will be. Businesses have different goals, and that will be reflected in their pricing.
Accurate estimates are in everyone’s best interest; the contractor wants the work at a price that they will be profitable, but also that the client will accept. I would like to make a note that there is a common notion that in order to be a savvy shopper you should get a certain number of quotes when considering a remodel or construction project. I do not think that is necessarily true, and will leave it at that for now. Perhaps I can address this in a future article.
So, if you do have several quotes in front of you, how do you decide who to hire?
Ask yourself if you trust each contractor to do the work to the standard of quality you require. If they cannot meet this first requirement, you should not hire them.
Think about what is most important to you, and what you want to avoid. Once you clarify that, consider who you would trust to best handle those items of concern and importance.
For example, if you have a very busy schedule, wasting time on missed appointments with your contractor may be a major headache for you, whereas that may not be as big a deal for someone who works from home. If a contractor does not get back to you for weeks, or only after multiple follow up calls, they may not be the best fit for you.
If you plan to live in your house for the next fifteen years, you may be more concerned about an excellent warranty than someone who is planning to move next year.
Determine if the contractor can deliver your project within your budget. While you may not want to share your exact budget with a potential contractor until you know more about them, it is still important to understand what you can afford. Though not every contractor will necessarily be within your budget, a good contractor will be forthcoming about roughly what it will cost to hire them to do your project, and may be able to provide suggestions for possible scope reductions to help achieve your vision within your desired budget.
Hiring anyone to do work in your home can be stressful, and rightly so. It is a peculiarly intimate relationship - most people, possibly even your friends, do not see your home in its every state of chaos, mess, and disrepair. Ultimately, you must find a contractor whom you trust to respect your home and deliver the work you need with attentiveness to the qualities you value.
This article is an expansion on a video we did on this topic called “Why Do Contractor Quotes Vary So Much?” You can view the video on our Instagram here or Facebook here.
