Comparing Contractor Prices


  • George,

    Your section on Selecting A Contractor says that there should not be more than a 20% difference in price between contractors. In principle I agree with this. However, please make your readers aware that this applies only across contractors that are doing business legally and ethically, are not misleading the prospect and are providing the same quality work.

    I am a contractor that is licensed, insured and pays taxes. Conversely, I personally know contractors who are unlicensed, uninsured and don't pay taxes. They can afford to charge 30% to 50% less then me. Having done an analysis on this very issue I know that if I do not pay taxes and insurance I would pocket twice as much.

    My contracts state very specifically what is and is not included in the work, so there is no "change order game" going on. For example, if I tell my customer that I will install new cabinets I am very clear about whether it includes removing and disposing of the old ones. I do not hit them with a change order in the middle of the project for work that they logically assumed was included in the original, but vague (and very misleading) proposal and agreement.

    My technicians (employees) are very experienced, and I expect very good work from them. Quality costs money. Putting up a wall without a square or a level saves a bundle. This is especially true if a poor quality contractor knows that someone else is doing the windows and trim. The quality problem gets passed onto the next guy who has to fix it to get the window to fit. Reputable contractors know that they need to build this type of "risk margin" into their price when they are entering an agreement where previous work may have been done incorrectly.

    To believe that a building inspector will correct these problems is simply not the case. Unlicensed contractors do not get permits - which incidently save money.

    Finally, contractors who do not charge adequately will simply not be around long, and often they are not business savy enough to know that they are not making money. Most contractors know how to calculate direct costs. However, many have no idea how to account for profit and overhead and how to apply an appropriate markup to cover them. If they did, their prices would be much higher and the industry would have a better reputation. In this case the 20% differential would apply.

    Please raise awareness with your readers about the entire pricing issue picture.

    Sincerely, Mark Trapani

    Thanks for helping with this.

    I am often called to inspect construction problems and act as an expert witness. In most cases of this kind, the problems tend to be very complicated and the solutions very expensive. By the time my clients pay me (and I am not cheap), pay attorneys, court costs and repair the shoddy work the total cost of the job often ends up to be much higher than even the highest bid. - George