Pricing Renovations

[Anonymous]

I am a General Contractor that specializes in high end residential remodels.

Common in the Industry is the idea of the Iron Triangle - meaning the three constraints that oppose each other in construction - Quality, Price, and Time. The prevailing wisdom is that you can only have two.

My firm is small as I manage my own work and subcontract out the work.

While not perfect, my work is regarded as meticulous.

I have found, mainly post COVID, that clients are very sensitive to schedule, meaning construction duration.

Further, it is not uncommon for partners in a marriage to have differing views - meaning one partner may be concerned with the details, while the other is more concerned with construction time.

Most of the folks in the trades understand that good work takes longer.

I also price enough work and work to keep my price competitive. Most clients agree when I explain that my goal for my pricing is for my price to be less than the quality I deliver. I explain that is my view of value.

Against this backdrop is the fact that tradesman are aging out of the industry and the new generation does not yet have the experience and knowledge required for good work.

So this makes delivering construction on schedule even more difficult. Add in the likely scope creep on a job and more often than not we miss the schedule.

So, as I think about pricing, I am starting to think that I need to raise my prices to provide the ability to apply more resources with the goal of decreasing construction time.

I also realize though that means the clients and the design teams need to stay current on decisions and selections - which is not a given - so it is likely that my margins will be compressed.

I came home last night and there was an Amazon truck in my driveway at 7 o’clock. My wife had ordered something the night before. I realize this is one of my challenges as clients can have this retail experience but we, in construction, cannot deliver this service.

I realize this is a long post but I thought to crowd source client side thoughts on remodeling pricing.

Given a typical remodel price of 750,000.00 or greater - the likely pricing differential would be 10-20 percent.

Lastly, I do believe that you lose quality as you gain speed.

So, overall, how much more would you be willing to spend on a whole house remodel for a larger crew that in theory can deliver on schedule or at least provide better schedule visibility ?

[Anonymous]

By pricing higher and doing higher quality work, you have less contracts, but will become in higher demand to those who prefer getting their money's worth, as word spreads.

[Anonymous]

A lot of people are afraid of being taken advantage of. There are some things you can shop for where you look around and find it costs what it costs, but with renovations there's going to be such a wide variation in estimates that as a customer you can't help but have a nagging feeling that you're being taken for a ride.

I don't know the answer, but it would be good to have some way of communicating to the customer why things cost what they cost.

[Anonymous]

The way I look at it, it shouldn’t cost me anymore for you delivering it on schedule.

In another word your words will be your reputation.

[Anonymous]

There is a whole segment of the remodel market that no one seems to be able to deliver reliably--the renovations in the $150K-$350K. Solve that segment and you'll be backlogged for a decade.

[Anonymous]

Anonymous wrote:There is a whole segment of the remodel market that no one seems to be able to deliver reliably--the renovations in the $150K-$350K. Solve that segment and you'll be backlogged for a decade.

Agree. Especially since many are now locked in what they thought would be starter homes, or getting way less homes then they wanted due to rates. I’d love some remodeling but it would be at the lower price range 100-200k cause I had to spend my life savings to get a shot at a 1980 split level in nova selling at 1.4.

[Anonymous]

Anonymous wrote:I am a General Contractor that specializes in high end residential remodels.

Common in the Industry is the idea of the Iron Triangle - meaning the three constraints that oppose each other in construction - Quality, Price, and Time. The prevailing wisdom is that you can only have two.

My firm is small as I manage my own work and subcontract out the work.

While not perfect, my work is regarded as meticulous.

I have found, mainly post COVID, that clients are very sensitive to schedule, meaning construction duration.

Further, it is not uncommon for partners in a marriage to have differing views - meaning one partner may be concerned with the details, while the other is more concerned with construction time.

Most of the folks in the trades understand that good work takes longer.

I also price enough work and work to keep my price competitive. Most clients agree when I explain that my goal for my pricing is for my price to be less than the quality I deliver. I explain that is my view of value.

Against this backdrop is the fact that tradesman are aging out of the industry and the new generation does not yet have the experience and knowledge required for good work.

So this makes delivering construction on schedule even more difficult. Add in the likely scope creep on a job and more often than not we miss the schedule.

So, as I think about pricing, I am starting to think that I need to raise my prices to provide the ability to apply more resources with the goal of decreasing construction time.

I also realize though that means the clients and the design teams need to stay current on decisions and selections - which is not a given - so it is likely that my margins will be compressed.

I came home last night and there was an Amazon truck in my driveway at 7 o’clock. My wife had ordered something the night before. I realize this is one of my challenges as clients can have this retail experience but we, in construction, cannot deliver this service.

I realize this is a long post but I thought to crowd source client side thoughts on remodeling pricing.

Given a typical remodel price of 750,000.00 or greater - the likely pricing differential would be 10-20 percent.

Lastly, I do believe that you lose quality as you gain speed.

So, overall, how much more would you be willing to spend on a whole house remodel for a larger crew that in theory can deliver on schedule or at least provide better schedule visibility ?

I just went through pricing out a major project. I received one quote that was roughly 60% higher than the other, which has been typical of my experience getting bids for projects in the area. There are contractors that seem to want to come in as low as possible while others seem to figure they can just shoot for the moon and while they might get fewer jobs they figure they will make their money on those few.

The problem is that it isn’t clear that paying the higher price actually gets you anything different or better.


What I would appreciate is if a quote laid out options.

“If you want it done in 6 months it will cost xxx.”

“If you can wait 9 months it will cost yyy.”

Providing that transparency allows the customer to decide whether it is worth it to them. (Especially if they need a rental during the project)

In my case I actually went with the higher quote, but I will never know for sure that what I am getting is really a good value.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I am a General Contractor that specializes in high end residential remodels.

Common in the Industry is the idea of the Iron Triangle - meaning the three constraints that oppose each other in construction - Quality, Price, and Time. The prevailing wisdom is that you can only have two.

My firm is small as I manage my own work and subcontract out the work.

While not perfect, my work is regarded as meticulous.

I have found, mainly post COVID, that clients are very sensitive to schedule, meaning construction duration.

Further, it is not uncommon for partners in a marriage to have differing views - meaning one partner may be concerned with the details, while the other is more concerned with construction time.

Most of the folks in the trades understand that good work takes longer.

I also price enough work and work to keep my price competitive. Most clients agree when I explain that my goal for my pricing is for my price to be less than the quality I deliver. I explain that is my view of value.

Against this backdrop is the fact that tradesman are aging out of the industry and the new generation does not yet have the experience and knowledge required for good work.

So this makes delivering construction on schedule even more difficult. Add in the likely scope creep on a job and more often than not we miss the schedule.

So, as I think about pricing, I am starting to think that I need to raise my prices to provide the ability to apply more resources with the goal of decreasing construction time.

I also realize though that means the clients and the design teams need to stay current on decisions and selections - which is not a given - so it is likely that my margins will be compressed.

I came home last night and there was an Amazon truck in my driveway at 7 o’clock. My wife had ordered something the night before. I realize this is one of my challenges as clients can have this retail experience but we, in construction, cannot deliver this service.

I realize this is a long post but I thought to crowd source client side thoughts on remodeling pricing.

Given a typical remodel price of 750,000.00 or greater - the likely pricing differential would be 10-20 percent.

Lastly, I do believe that you lose quality as you gain speed.

So, overall, how much more would you be willing to spend on a whole house remodel for a larger crew that in theory can deliver on schedule or at least provide better schedule visibility ?

I just went through pricing out a major project. I received one quote that was roughly 60% higher than the other, which has been typical of my experience getting bids for projects in the area. There are contractors that seem to want to come in as low as possible while others seem to figure they can just shoot for the moon and while they might get fewer jobs they figure they will make their money on those few.

The problem is that it isn’t clear that paying the higher price actually gets you anything different or better.


What I would appreciate is if a quote laid out options.

“If you want it done in 6 months it will cost xxx.”

“If you can wait 9 months it will cost yyy.”

Providing that transparency allows the customer to decide whether it is worth it to them. (Especially if they need a rental during the project)

In my case I actually went with the higher quote, but I will never know for sure that what I am getting is really a good value.

The problem for the contractor in pricing that way is that if you don't hit the six month deadline it's too easy for the customer to demand the nine-month price. It's not going to matter to the customer if the delays were out of the contractor's hands, and that if the customer had signed up for the nine month project it would have taken twelve months.

[Anonymous]

There are ways to structure a contract to incentivise things to stay on schedule. Of course that requires the contractor to assume some risk.

Some delays are truly beyond the control of the contractor but anyone who has worked with contractors has had the experience of them disappearing to work on some other job/etc.

It is easy to bid on a project saying it will take 6 months and then let it stretch out to 9 months so you can squeeze in a few smaller jobs at the same time.

[Anonymous]

Anonymous wrote:There are ways to structure a contract to incentivise things to stay on schedule. Of course that requires the contractor to assume some risk.

Some delays are truly beyond the control of the contractor but anyone who has worked with contractors has had the experience of them disappearing to work on some other job/etc.

It is easy to bid on a project saying it will take 6 months and then let it stretch out to 9 months so you can squeeze in a few smaller jobs at the same time.

If the delay is based the control of the contractor like weather and supply chain that can be included into the contract.
But what ends up happening is employees not showing up to work because of another job.

[Anonymous]

Anonymous wrote:
Some delays are truly beyond the control of the contractor but anyone who has worked with contractors has had the experience of them disappearing to work on some other job/etc.

If they're waiting for something on your job, of course they're going to work on another job. Would you rather they just sit idle at your site?

[Anonymous]

Anonymous wrote:

Anonymous wrote:
Some delays are truly beyond the control of the contractor but anyone who has worked with contractors has had the experience of them disappearing to work on some other job/etc.

If they're waiting for something on your job, of course they're going to work on another job. Would you rather they just sit idle at your site?

They use it as excuse.

[Anonymous]

Anonymous wrote:

Anonymous wrote:
Some delays are truly beyond the control of the contractor but anyone who has worked with contractors has had the experience of them disappearing to work on some other job/etc.

If they're waiting for something on your job, of course they're going to work on another job. Would you rather they just sit idle at your site?

We did two bigger projects and both went the same way. Toward the end the contractors would barely show up and the reason was not that they were waiting for anything. They were just dragging their feet while working on another project. I think they underestimated how long our project would take and scheduled new work before ours was done. It was incredibly frustrating.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:
Some delays are truly beyond the control of the contractor but anyone who has worked with contractors has had the experience of them disappearing to work on some other job/etc.

If they're waiting for something on your job, of course they're going to work on another job. Would you rather they just sit idle at your site?

We did two bigger projects and both went the same way. Toward the end the contractors would barely show up and the reason was not that they were waiting for anything. They were just dragging their feet while working on another project. I think they underestimated how long our project would take and scheduled new work before ours was done. It was incredibly frustrating.

This has been the story of every renovation I have watched happen on my block.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:
Some delays are truly beyond the control of the contractor but anyone who has worked with contractors has had the experience of them disappearing to work on some other job/etc.

If they're waiting for something on your job, of course they're going to work on another job. Would you rather they just sit idle at your site?

We did two bigger projects and both went the same way. Toward the end the contractors would barely show up and the reason was not that they were waiting for anything. They were just dragging their feet while working on another project. I think they underestimated how long our project would take and scheduled new work before ours was done. It was incredibly frustrating.

I can't help but think you're misinterpreting what was happening. Every contractor wants to finish the job and get paid.

But if there's a critical path task that just has to wait, it makes no sense to keep working until it's resolved. It takes more time to start and stop than it does to do a job all the way through. I'll offer the competing hypothesis that every job proceeds swimmingly until the roadblocks pile up, and then doesn't start up again until they're all cleared.