Can I Pay Too Much For Home Improvement?

Since there are no established retail prices in the remodeling industry, people often shop price even more than when buying a car or house. Many times, they are tempted to go with a higher price because it seems like a good deal–the company offers to do the job for 30% (or some other figure) off their normal pricing as consideration for getting the job. Plus, because it’s a big company, and not a little independent guy, the owners think there is greater security in dealing with an “established” company.

Let’s be frank. Nobody wants to pay more than they should. But if you pay a higher price to get good quality, and you get it, then the price is irrelevant. It’s when you pay more and get lousy products or installation (or both) that you should be concerned.

Generally, there are 3 approaches to getting a project done at the house (other than D-I-Y)–use an independent contractor, use one of the big companies that does all the advertising, or use someone in between. In all cases, the actual cost of the project, namely the material and labor cost, should be reasonably close, assuming the material is of comparable quality.

The variables, then, are overhead and profit. Let’s look at a theoretical window project of 10 windows to be replaced. Independent A quotes $3000, Big Guy B quotes $5000, and In-Between C quotes $4000. Assuming comparable products and reasonably skilled labor, what are the differences? Contractor A will be doing it to cover his basic labor investment and to cover material cost.

There are usually some risks associated with him, because he probably is not insured and probably does not have a service department. He may be hard to get in touch with, since he usually operates out of his pick-up truck. So if you feel that the risks outweigh the higher prices, then Contractor A is the choice.

On the other hand, if riskiness is not your bag, then Contractor B or C is up for consideration. Mr. B will have insurance coverage, a service department, usually a skilled installer, and, of course, a big advertising budget and large overhead, plus (probably) a sales commission to pay. Thus, the $5000 price tag.

The In-betweener is usually insured, usually has an office, and usually does good work. The reason you haven’t heard of him is because he doesn’t have an advertising budget like the Big Guy. He offers more security than the independent, but a little less than the big guy. And with a price in between the low and high end, he is worthy of consideration.

So, let’s summarize. If you get a bad job, nothing makes up for that. If you get a good job, even the $5000 price is worth while, given the peace of mind you got by dealing with a more secure choice. So you really didn’t pay too much.

But the best overall choice would probably be the guy in the middle. These companies are harder to find, since they don’t advertise like the big guys.

But in general, the In-between guy offers relatively low risk and a modest price tag, since he doesn’t have the big overhead. So you get the benefits of the big guy without the risks of the independent guy.

Perhaps the biggest consideration of all is the type of project you are planning. Check out our cost versus value page to see what pays back the best for the investment. For example, a bath remodel will always pay off better than a new swimming pool. Check the references, see if you can communicate well with the company and it’s representatives. Then, make an informed decision and enjoy (hopefully) the process!

Source by James Brubaker