When you plan a major remodeling project, first things first: you have to hire a contractor. Of course, you'll want to make sure that you are hiring the best person for the job. You'll want to consider a contractor's past work, your rapport with the person, and perhaps most importantly, the price they quote you.
Many homeowners are baffled when it comes to looking at a quote. They see lots of numbers, and of course, the final price. No one wants to pay too much. One common cost on a quote that homeowners often grapple with is the contractor markup. This markup is the amount over cost that a contractor charges. It's vital for contractors, since this is where they earn their profit, but what kind of markup is appropriate?
The answer? The honest truth is that there is no industry standard for pricing a remodeling project. Contractors will create margins that suit them, as well as what the industry will bear.
This can all sound rather negative from the consumer's point of view, but it doesn't mean you lose out. If you don't like the contractor's price, your choice is simple: Don't hire the contractor! It's always suggested to get at least three quotes from contractors, so if you feel one is too high, maybe one of the other two will be more in your ballpark. If you are working within a certain budget, make sure to stick to that budget. Choose a contractor who quotes you within your budget, and who you think will be able to do the best job for you.
Just how much a contractor will charge is compromised of many components, but you can expect at least 20 percent. Obviously it might be more if your contractor has a great reputation for his work and is in great demand by everyone in your neighborhood. The theory of supply and demand isn't lost on the remodeling industry. Sometimes if you want the best, you need to be prepared to pay a little bit more.
Contractors don't use markups as a way to make an easy penny off homeowners. Instead a markup is where contractors are able to truly make a living from their work. So, when you're looking at your quote, don't assume you're being cheated. Instead, take your time to look over your quote and decide if you're truly looking at a fair price.