So you’ve taken that jump into the pool of home renovators and now you want to know whether or not the price you received is fair. We will do our best to help you out, but you have to be prepared to do some homework.
To begin with, let us talk about how the pricing of an actual project happens at the highest level. All money that goes into a construction project is divided into two parts: 1, the cost of material and 2, the cost of labor. Historically and in traditional projects, the cost of a project is estimated to be about 60% material cost and 40% labor cost. With some basic math, you can see that material is where the cost can spiral, since many of us like to spend our money on buying “show-off” or high-quality items. Labor is not hard to figure out if it is based on doing normal, average things. Once you have special products that require special skills to install, your cost can be driven up – sometimes tremendously.
Simply put, most contractors price your project based on a standard set of tasks that have a labor component and a material component.
There are standard pricing books everywhere that are updated yearly, and most contractors price a project based on those books. The contractors will also consider their own personal experiences and nuances, and any pricing fluctuations in the market they observe.
How to figure out whether you got a good price or not
- Divide the total price into labor and material. Some quotes will not differentiate these two components, so be sure to ask for that. It should also include all subcontracts involved.
- Check each bid for labor as a separate unit of work, and the same goes for subcontracts. For example, roofing is normally a subcontract, so separate it out and then compare. Basically, you need to tell the contractor that you want your bid separated by labor, material, and subcontracts.
- Get a laundry list of all the material used and compare the bids to each other. After you have done that, check all materials on the list (specifically those that go into the allowances – do internet pricing checks on those materials) to see whether what you got in terms of pricing is in line or not. What you want to guard against is a contractor trying to underprice something so he or she can get in and then hit you with a change order much later, often when you are living in the middle of a dusty room. Most of us intuitively fight what we believe to be expensive and fall into this trap. DO NOT DO THAT. Most overruns are due to incidents of underpriced, oversimplified bids that eventually explode.
- Pick the pricing that seems most reasonable to you and choose the contractor who seems most transparent. That’s the contractor you want – even if he or she seems more expensive – because he or she will tell you the truth so you can deal with it before that truth becomes a crisis.
You can, however, save yourself a LOT of time and pain by using Kukun Smart Bids to get bids in a simple, easily comparable way – plus we’ll alert you about any underpriced or overpriced items based on your zip code. This smart tool even throws in a great bonus by creating a schedule for you (extracted from the quote) to load onto your mobile device and will send you reminders ahead of time so you can check the status of every task and every material that needs to be purchased and avoid costly delays.
Overall, renovations can be inspiring and enjoyable, but they require us to understand construction and control our urges to make emotional decisions when hiring pros or buying products. Happy renovating…