Why are some contractors more expensive than others?
Have you ever wondered why some contractors are more expensive than others? Why might one contractor quote $30,000 for a remodeling project, while another will charge $50,000 for the same job? Is the pricier contractor overcharging? Is the cheaper one cutting corners? How will you know what’s a fair price?
Has this left you wondering:
Why is there a difference between contractors’ prices?
Why are some contractors more expensive than others?
How do contractors come up with their prices?
What factors affect how much a contractor charges?
What are contractor prices based on?
How will I know if a contractor’s price is fair?
How can I avoid being overcharged by a contractor?
Let’s explore the factors that influence contractors’ pricing and help you make an informed decision for your project.
Why is there a difference between contractors’ prices?
To put it simply, contractor prices vary due to several factors including staffing costs, overhead expenses, and the quality of materials used. Each contractor's unique approach to these factors results in different pricing structures.
What factors affect how much a contractor charges?
How much a contractor charges for a project is based on many factors. Here are the key factors that influence a contractor's pricing:
Staffing
The largest cost for most construction companies is staffing. Fair compensation and good working conditions are crucial for quality work, and these come at a cost.
Staffing costs vary based on the skill levels of the staff. A master carpenter with 20 years of experience is more expensive than a first-year drywall apprentice. Efficient contractors assign tasks appropriately, using experienced workers for complex tasks and apprentices for simpler ones. However, not all contractors have the ability to optimize efficiency this way.
Unfortunately, some companies cut costs by underpaying their staff or misclassifying their employees as subcontractors. This not only affects workers' morale but also poses risks to homeowners if workers are not properly insured.
Overhead Costs
Overhead refers to the ongoing expenses businesses must cover, such as equipment, office staff, insurance, and rent. Overhead does NOT include direct costs of the project, like materials used for your remodel or dumpster costs for the project waste (these are called Cost Of Goods Sold, or COGS). Overhead refers to the costs a business must pay whether they are completing a project or not.
There is a common misconception that large companies always have higher overheads than small ones. Normally, the opposite is true. While larger companies may have more equipment, they also complete more work, making their overhead costs proportionally lower.
Tools & Equipment
Contractors invest heavily in tools and equipment, often in the tens or hundreds of thousands of dollars, depending on the company’s size and specialty. Larger companies usually have higher equipment costs but also handle more projects, which balances out these expenses.
Operating Costs
Operating costs can differ widely between companies. Factors such as having a physical office, outsourcing tasks, or investing in marketing all influence overall expenses. Companies with similar specialties, capabilities, and staff size will usually have similar operating costs.
However, companies with different specialties, capabilities, and staff sizes can have wildly different overhead costs! For example: a company with multiple trucks, a showroom, a warehouse, and a large office staff will have very different overhead costs than a company with a single truck and a handful of tools.
Licensing
In states like New Hampshire and Maine, general contractor licensing isn't required (in fact, a general contractor cannot get a license in these states, even if he wanted to), but it adds a layer of accountability in states where it is.
Licensing itself is fairly inexpensive and adds very little to a contractor’s overhead costs. But, licensed contractors tend to avoid unethical practices, to maintain their license, which potentially makes them more expensive than unlicensed competitors.
Why Should I Care About a Contractor’s Overhead?
You might wonder why a company’s overhead should concern you. As a homeowner, why should you pay more just because a company doesn’t manage its overhead responsibly? Quite frankly, you shouldn’t! It's your prerogative to find a contractor who manages their overhead efficiently without compromising quality or ethics.
Workmanship
Quality workmanship takes time and skill, both of which are expensive. Higher-priced contractors often deliver superior quality because they invest more time and resources into the project. This can be beneficial if you desire superior craftsmanship, or a drawback if you prioritize low cost. It's important to know what level of quality you want and ensure your contractor will meet those standards.
Business and Administrative Knowledge
Contractors who understand their business costs and plan accordingly are less likely to underbid projects. They are therefore less likely to leave projects incomplete. Accurate pricing and detailed project management ensure smoother and more reliable project completion and are the embodiment of a knowledgeable, professional contractor.
Transparency and Accurate Information
Up to this point, we have been discussing the tangible costs involved in a project and how these costs affect what a contractor must charge for a project. What we are about to discuss isn’t a factor in the real costs of a project. It is, however, a factor in your buying decision, so we think it is worth mentioning:
Some contractors might quote lower prices initially by leaving out certain aspects of the project, either by mistake or intentionally. When done intentionally, this is a fraudulent practice. To avoid unexpected costs later, be sure to get detailed, written quotes that include all project elements.
What are contractor prices based on?
Contractor prices are based on several factors, including the complexity and scope of the project, the quality of materials chosen, the expertise of the workforce, and the contractor's overhead costs. Contractors with higher overheads due to better equipment, skilled labor, and comprehensive insurance will typically charge more.
How will I know if a contractor’s price is fair?
A fair contractor’s price is transparent and detailed, reflecting all aspects of the project. Look for detailed, written quotes that include all elements of the project. Additionally, a contractor's reputation, customer reviews, and past work quality can provide insights into whether their pricing is justified.
How can I avoid being overcharged by a contractor?
To avoid being overcharged, ensure you get a detailed quote that includes what is going to be done, what materials are going to be used, and, most importantly, what is NOT included. Be sure to check the contractor's reputation and references as well. Clear and transparent communication throughout the project helps prevent misunderstandings and unexpected costs.
Is Rothrock Kitchen & Bath Remodeling Expensive?
At Rothrock Kitchen & Bath Remodeling, we believe in transparency and fair pricing. Our overhead is balanced between small and large companies, allowing us to keep costs reasonable while paying our team well. We focus on delivering quality workmanship with precise cost calculations and thorough project tracking. Our detailed quotes ensure you know exactly what to expect, with no hidden fees or surprises.
Overall, our prices are competitive with other quality-focused, design-build contractors in Seacoast New Hampshire, and southern Maine. While we are generally more expensive than production builders, we are often more affordable than local luxury contractors.
Here is what one of our clients had to say:
“Rothrock (Kitchen & Bath Remodeling) does excellent work. They did three major projects for us. Everything turned out beautiful and functional. Ben and Kelly are meticulous, dependable, communicative, and extremely hard-working. They never missed a day of work over many weeks. Their pricing was competitive with estimates we received from other contractors. I recommend Rothrock (Kitchen & Bath Remodeling) as a high-quality contractor in the greater Seacoast area.” - Kimberly, Durham, NH
What Else Will Affect the Cost of My Remodeling Project?
Let’s talk about a few more things that can affect the cost of your remodeling project.
For deep dives into remodeling costs, be sure to check out the articles in our Learning Center:
What factors will affect the cost of my bathroom remodel?
What factors will affect the cost of my kitchen remodel?
Scope of Work
The scope of work for the project directly influences a contractor's pricing. Projects that require extensive work, such as complete renovations or additions, demand more time, labor, and resources, thereby increasing the cost. Conversely, smaller projects or those with limited tasks will generally be less expensive.
In our experience, the number one reason for a difference in cost between contractors is a difference in the scope of work being quoted. That’s why it’s crucial to have a detailed scope of work outlined in the quote, to ensure you are comparing apples to apples and avoid misunderstandings.
Material Quality
The quality of materials used in your project can significantly affect the overall cost. High-end materials like custom cabinetry, premium countertops, and luxury flooring come at a premium price. While they enhance the durability and aesthetic appeal of the finished product, they also increase the project's cost. Conversely, opting for more affordable materials can help keep the budget in check but may compromise on longevity and appearance.
Aesthetic Priorities
As a homeowner in the New Hampshire seacoast, your priorities might include comfort, aesthetic appeal, and long-term value. It's essential to choose a contractor who aligns with these values and understands your specific needs. Whether you're looking for a cozy, traditional kitchen remodel or a modern, sleek bathroom update, finding a contractor who listens and translates your vision into reality is crucial. This alignment can influence the cost, as contractors skilled in specific styles or customization may charge more for their expertise.
Safety and Reliability Needs
Ensuring the safety and reliability of your home is paramount. Working with a contractor who uses quality materials and adheres to high safety standards will give you peace of mind. Licensed (where applicable) and insured contractors offer additional security, protecting you from potential liabilities. These high standards and protections can result in higher costs, reflecting the premium on quality and safety.
Durability Requirements
Investing in your home is not just about the immediate outcome but also about the long-term benefits. Quality workmanship and durable materials can increase your home's value and reduce future maintenance costs. A reputable contractor will help you make choices that enhance your home's appeal and longevity. Investing in such quality will often mean higher upfront costs, but can save money in the long run through reduced maintenance and increased property value.
Customer Service Needs
Clear and transparent communication can significantly impact your remodeling experience. Look for contractors who provide detailed quotes, maintain open lines of communication, and keep you informed throughout the process. This level of transparency helps build trust and ensures that there are no surprises down the line. Contractors who offer this level of service may charge more due to the additional time and effort required for thorough communication and detailed planning.
Environmental Considerations
If sustainability is important to you, consider choosing a contractor who prioritizes environmentally friendly practices. This could include using sustainable materials, implementing energy-efficient solutions, and minimizing waste. Contractors who are committed to green building practices can help you create a more eco-friendly home. These sustainable options may increase project costs due to the higher price of eco-friendly materials and specialized labor.
Monetary System Realities
Inflation has significantly impacted the cost of remodeling projects in recent years. Prices that would have been considered "I don't want the job" prices a few years ago are now today's fair prices due to the skyrocketing building costs we've experienced since Covid. Material costs, labor rates, and overall project expenses have increased, causing remodeling projects to cost more than ever before. Understanding this context can help you set realistic expectations for your remodeling budget.
Final Thoughts
Choosing a contractor is about more than just price. While investing more money than necessary into a project may be a poor use of financial resources, hiring a contractor who doesn’t meet your expectations is equally wasteful. It’s important to consider the quality of workmanship, materials, and customer service you desire, as well as any other requirements you might have for the project. With the right contractor, you'll get the best value for your investment, and you’ll get to enjoy your new space exactly as you desire!
If you have any questions, need further information about our services, or feel like we might be the right choice for your project, feel free to reach out. We're here to help you make the best decision for your home!
