What is the right price for a home improvement or remodeling project, or for anything? The right price is what a willing buyer will pay a willing seller for their goods and services. It may be helpful to know what your competitors are charging, but the reality is that many contractors DO NOT know how to price things right. Often contractors miss scope elements, undervalue their labor, and don't understand overhead costs or profit goals.
How Much Should Remodeling Cost?
In the world of insurance claim repairs, a common estimating tool called Xactimate provides standardized pricing based on feedback from various sources. Unit pricing, rate and materials comparisons, national averages and other factors can help a contractor to confirm their pricing strategies. Market "norms" and software programs can be useful benchmarks but they do not account for all of the elements that go into drafting the right price for your services as a contractor.
If you are a contractor and you want to sharpen your skills for estimating, check out Jon Isaacson's fourth book and estimating course - How Not To Suck At Estimating: Habits for Better Project Outcomes (Coming Soon).
How Much Do Insurance Repairs Cost?
Focus on the scope of work, the vision of the customer, and your unique approach to the project. Contractors and consumers should focus on the value exchange between the two parties. To that end, Steven Patrick, of Level the Playing Field, joined us for The DYOJO Podcast Episode 82. He shared an informative story about a plumber that was providing great value to their customers but once their boss told them they were, "Charging more than anyone," their mindset shifted from value to cost and their habits changed.
Why Are Contractors So Expensive?
Please don't misconstrue the words of this author to encourage anyone to "price-gouge" rather, most contractors should be charging more for their services, especially when they provide the service and quality to match. Most contractors are hesitant to raise their prices or charge what they should be charging to build their businesses (i.e. hire more people, pay their skilled labor more, invest in retirement, provide benefits, etc).
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