Getting extremely frustrated with contractor quotes

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Getting extremely frustrated with contractor quotes

Bryan Gambina
Member since 2018 · 8 posts · 1 vote

Hello all,

I am new to Bigger Pockets, but I've been involved in a rehab for over 3 years now. I'm in a 1,800 sqft SFH rancher. I gutted half my home and put an addition on, and as I tore everything apart, it became evident that everything needed to be done, soup to nuts. Anyway, at the time, my thinking was there was no way for me to afford having a contractor do all this so I decided to continue doing everything myself. Fast fwd three and a half years and I'm trying to finish this and started reaching out to local contractors. The quotes I am getting are double, triple, quadruple, and even ten times what the average ranges are, even when referencing J Scott's book "The Book On Estimating Rehab Costs." Looking at me, there's no way I have "I'm rich" tattooed across my forehead, so I'm trying to figure out a) what am I doing wrong ? b) where are these contractors that give reasonable estimates ?

Here are some examples:

Siding (home and detached garage) = $40,000

Framing a 20' long load bearing wall = $5,000

Installing forced air HVAC system = $16,000

Concrete repair = $12,000

New Driveway = $110,000

Landscaping and hardscaping = $500,000 (yes you read that right)

I get multiple estimates and they all seem to fall in that idiotically high range.  On top of that, these contractors refuse to do cost breakdowns of the estimate so I can see where the prices are coming from.

Any help or even a finger point in the right direction is greatly appreciated!

Sincerely,

Bryan Gambina 

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Patricia Steiner
Real Estate Broker · Hyde Park Tampa, FL · Member since 2019 · 2k+ posts · 3k+ votes
7y

Bryan, there's a lot factoring into the prices you received.  Builders are complaining about the "unrelenting cost increases" of building materials. Another is the labor issue/shortage.  Contractors are in high demand right now and some trades like framers are in short supply.  Also, most of the items on your list require more skill, permitting, and are time consuming.  That cost breakdown?  That ended a long time ago in my market.  

Don't scream but other than the landscaping/hardscaping, the quotes aren't shocking me.  For example:  "Framing costs $7 to $16 per square foot to install top and bottom plates with studs. When including drywall, you'll spend $20 to $30 per linear foot. Framing costs change slightly for load bearing walls, with the type of material used, and for door and window openings." (End/Average Cost HomeAdvisor).

My recommendation is to get creative:

  1.  Look for trades already working in your neighborhood.  I had a concrete repair to my driveway done very inexpensively by following a concrete truck to a neighboring property and asking if they thought they might have enough concrete left over to fix my driveway. The guys did it as "side job" on their lunch hour for cash.  It was a commercial crew and their work was stellar.
  2. Go on Thumbtack to bid your jobs. I got two great contractors who had just left their employers to start their own companies that way. They now do work for my clients.
  3. Go to a wholesale nursery and ask if they do install.  Hang out at Home Depot on Thursday when the nursery workers are stocking and see if they're interest in side work. 

The book on estimating rehab cost is being rewritten every day.  You'll be the expert when your rehab is over.  I look forward to reading your book!  

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  • Patricia Steiner
    Real Estate Broker · Hyde Park Tampa, FL · Member since 2019 · 2k+ posts · 3k+ votes
    7y

    Bryan, there's a lot factoring into the prices you received.  Builders are complaining about the "unrelenting cost increases" of building materials. Another is the labor issue/shortage.  Contractors are in high demand right now and some trades like framers are in short supply.  Also, most of the items on your list require more skill, permitting, and are time consuming.  That cost breakdown?  That ended a long time ago in my market.  

    Don't scream but other than the landscaping/hardscaping, the quotes aren't shocking me.  For example:  "Framing costs $7 to $16 per square foot to install top and bottom plates with studs. When including drywall, you'll spend $20 to $30 per linear foot. Framing costs change slightly for load bearing walls, with the type of material used, and for door and window openings." (End/Average Cost HomeAdvisor).

    My recommendation is to get creative:

    1.  Look for trades already working in your neighborhood.  I had a concrete repair to my driveway done very inexpensively by following a concrete truck to a neighboring property and asking if they thought they might have enough concrete left over to fix my driveway. The guys did it as "side job" on their lunch hour for cash.  It was a commercial crew and their work was stellar.
    2. Go on Thumbtack to bid your jobs. I got two great contractors who had just left their employers to start their own companies that way. They now do work for my clients.
    3. Go to a wholesale nursery and ask if they do install.  Hang out at Home Depot on Thursday when the nursery workers are stocking and see if they're interest in side work. 

    The book on estimating rehab cost is being rewritten every day.  You'll be the expert when your rehab is over.  I look forward to reading your book!  

    15Reply
  • Angie Shires
    Real Estate Broker · Tyler, TX · Member since 2018 · 193 posts · 143 votes
    7y

    @Bryan Gambina those prices seem high for my area, where are you located? That can make a huge difference. 

    You can sub out a lot of the work yourself and save yourself quite a bit of money. Do you have many contacts in the area you are trying to sub? If so, reach out to them! I always ask for referrals first from people that I trust will be honest. People are always very happy to tell you about the good/bad experiences they've had with contractors. 

    If you don't have a lot of contacts, ask for referrals here on BP! 

    Spring is every contractor's busy season! Don't be afraid to negotiate with the contractors that you like....and ALWAYS check references! Good luck! Let us know how it goes. 

    2Reply
  • Ned CareyPro Member
    Moderator
    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
    7y

    @Bryan Gambina you don't mention where the project is. Some areas a just naturally more expensive. Part of it is getting the right kind of contractor. IF you are picking homeowner contractors with big ads you are going to pay homeowner prices. It is normal for them to be easily double what an investor contractor would charge. 

    Also most contractors don't like to finish other's work. You are probably the worst prospect for a contractor; a one off rehabber that can't or doesn't want to finish the job.  You are likely to be perceived as someone who will be picky like a homeowner but with the price expectations of an investor.

    8Reply
  • Tim Johnson
    Lender · Grand Rapids, MI · Member since 2018 · 703 posts · 446 votes
    7y

    I'm a contractor and I know why they are tossing out high bids. 

    1. They don't need the work

    2.  The scope you are telling them is not what you are looking for.  Be more detailed.  Tell them the type of siding you want, ask them for per sq prices and go from that.

    3.  You are coming across as very demanding so the contractors are giving crazy numbers because they simple don't want to work with you.

    4. How are you asking for quotes? 

    5.  They are nervous about not getting paid, I personally will never take over a job that has been started because I have been burned before

    6.  Try a different approach, ask  a GC for help, say you are in over your head, be honest and transparent.  I always give per prices to an honest and transparent customer.

    Wish you the best

    14Reply
  • Max T.
    Investor · Philadelphia, PA · Member since 2015 · 3k+ posts · 3k+ votes
    7y

    sounds like monopoly money

    7Reply
  • Kenneth GarrettPro Member
    Investor · Florida Panhandle/Illinois · Member since 2016 · 4k+ posts · 3k+ votes
    7y

    @Bryan Gambina

    Those numbers are way out of line for my area.  

    HVAC replacement is generally 5000-5500 80% (gas forced air)

    Siding should not exceed 20K depending on size of home two story/1 story

    Load bearing wall depending on the specifics might be ok

    Concrete Repairs be more specific 

    Driveway unless it’s incredibly long 110K is way over priced assuming it’s concrete 

    I won’t comment on landscaping price

    Keep looking for contractors.  You might want to find contractors who are working on a new subdivision who are interested in side work.  We find a lot of contractors that way.

    If you are in a very high end area you will pay higher rates.  

    Good Luck.

    1Reply
  • Matt Groth
    Contractor · Grand Marais, MN · Member since 2016 · 249 posts · 417 votes
    7y
    Originally posted by @Tim Johnson:

    I'm a contractor and I know why they are tossing out high bids. 

    1. They don't need the work

    2.  The scope you are telling them is not what you are looking for.  Be more detailed.  Tell them the type of siding you want, ask them for per sq prices and go from that.

    3.  You are coming across as very demanding so the contractors are giving crazy numbers because they simple don't want to work with you.

    4. How are you asking for quotes? 

    5.  They are nervous about not getting paid, I personally will never take over a job that has been started because I have been burned before

    6.  Try a different approach, ask  a GC for help, say you are in over your head, be honest and transparent.  I always give per prices to an honest and transparent customer.

    Wish you the best

     Tim took my answer! I am very reluctant to take on jobs the homeowner started, but then quit. No offense, but it means you think you know what you are doing. Siding isn't too tough. My cost on prefinished lp smartside is high, and a month ago, it went up another 8.5 percent. A single corner is over $100. It adds up fast. I ordered siding for my 1500 ft ranch, with attached garage. My cost is cost to 10k, before the price hike, and before my mark up. No labor included. Add on old siding removal, potentially with lead based paint on it...you get the idea. Your landscaping price is insane, and probably related to 1 and 3 in Tim's list.

    8Reply
  • Lee Bell
    Real Estate Appraiser · Isabella lake, CA · Member since 2018 · 628 posts · 491 votes
    7y

    I also think Tim has it.

    $110k for a driveway? How long is that bad boy and how steep of a hill?

    I bet they would love you to hire them at that price. /eyeroll

    2Reply
  • Mike Dymski
    Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
    7y

    I recommend getting referrals from other investors and agents.

    Prices are high right now...and available is low.  In many markets, you have to have scale.

    3Reply
  • Lynnette E.
    Rental Property Investor · TN · Member since 2018 · 2k+ posts · 2k+ votes
    7y

    Since you already waited this long, why not wait until the Fall when people are not trying to do something with their tax refunds and others are not trying to add to their house before school restarts at the end of the Summer?  Prices will be lower in the Fall.

     Also, since you have pretty much the whole addition / house to do, it would be better for you to use a general contractor than to have to line out all the individual contractors.    The contractors are either thinking you are a know it all homeowner who will waste their time trying to direct them or they are thinking you are cheap and demanding and will cheat them in the end.  Contractors do not like working directly with the home owner.

    Being a female in TN, I have found I actually get better prices going directly through a general contractor, and have had him work on 5 different properties now and it really is the way to go for me.  Worth the 15% overhead he charges me over his bill.  He does all the coordination, and fixes all the issues that come up.  Plus my warranties are through the general contractor, not an individual who may be gone next week.  And with the prices you have quoted, you could pay a GC 50% overhead and still come out better.

    4Reply
  • Bryan Gambina
    OP
    Member since 2018 · 8 posts · 1 vote
    7y

    Patricia Steiner, thank you for your input. Is there a reason for the cost breakdown disappearing ?     

    Assuming the following:

    Snow loads for my region (Columbia, MD) 

    Lets Assume a 20' L x 96" H support wall while the standing LB wall is removed. ($150)

    20' L x 96" H load bearing wall framed 16oc w/ 2x6 lumber, standard top and bottom plate config.  ($150) 

    two windows framed in with basic headers and cripple studs

    1/2"  4 x 8 drywall (5 sheets @ $12ea = $60 ) 

    tar paper or Tyvek ($40 x 1 roll) 

    sheathing/standard osb (5 sheets at $20/sheet = $100)

    Lets assume this isnt a wet wall

    Lets assume theres no siding yet since that wasnt included. 

    Also, lets assume consumer pricing from a local hardware store + pillow. 

    ....and forget about cost of windows and drywall finishing since that wasn't included

    Thats $500 in materials w/ pillow, and lets add another $500 for any permits and unforeseen issues, business expenses, insurance, etc. Total =$1000

    Labor = I'm slow, so this would take me 8-10 hours to complete by myself, lets call it 12 with logistics.

    This is when I want to see a cost breakdown to justify the same wall being built by a "professional".  I want to see why  a load bearing wall that costs around $1000 in materials with plenty pillow built in, costs me $5000 ?

    Even at $100/hr, that's $2200 in total.  Am I missing something ?

    0Reply
  • Bryan Gambina
    OP
    Member since 2018 · 8 posts · 1 vote
    7y

    Angie Shires

    Ned Carey

    Tim Johnson

    Max T.

    Kenneth Garrett

    Matt Groth

    Lee Bell

    Mike Dymski

    Lynette E. 

    I really appreciate your inputs, I do!  That being said, I feel there were a lot of assumptions made and that's probably because I didnt go into that much detail since I was trying to see if anyone else was in general agreement.  I apologize for not going into detail so here some detail to hopefully clear things up and would again like to hear your inputs:

    The property I purchased needed everything.  I chose to tackle the interior of the house first and in doing so gutted most of the interior of the house as mentioned before.  I will admit I had zero idea what I was doing to begin with, but I did hire a mentor/licensed GC for 8 weeks to coach me through most of this. I understand 8 weeks isnt a lot of time to master a trade, but given my background it was more than enough to get me started.  Furthermore, none of the estimates I received was to finish work I had started or didn't feel like finishing or am not capable of finishing.  I reached out to contractors to get estimates for things that are still on my list and have not gotten to yet and haven't even touched yet, so I dont understand some of these responses.  Yes they see the work thats going on.  Im 95% complete on my part of the renovation and addition. I dont want to spend another 3-4 years doing a driveway, landscaping, hardscaping, the exterior,  and the other items I mentioned, none of which I have touched yet as stated before.  So Im trying to sub out the work to people who are faster than I am, but I want a fair price!

    Ned = Thanks of responding.  I'm in Columbia, MD, which as you know, is pricier than Glen Burnie as an example.  A yard of concrete is a yard of concrete, lap siding is lap siding, and labor per hour is labor per hour.  It honestly bothers me immensely that both myself and the homeowners around me get quoted higher pricing than someone in another county.  I would love an explanation as to why that is please.  Given that materials cost the same within a 20 mile radius, the only reason I can come up with for the cost being higher is that a contractor knows they can get more money out of someone who doesn't know any better from a higher priced area, which is highly unethical in my book and it infuriates us.  

    Tim = Thank you for responding. 

    1) Why cant they just say that, why waste both of our time? 

    2) I will try to be better at that approach, I feel I am being detailed though, but will see what I can polish. 

    3) As an example, the home I purchased did not come with HVAC.  I asked a very reputable small business to come out to price a full system.  I will yield to the professional on this since I admittedly dont know much about J load calculations and duct drag and so on and so forth.  I kept my mouth shut and let the pro do his thing, and got quoted double what I was expecting.  Again, any quote Ive gotten I keep my mouth shut.  I dont play dumb and I dont act pompous, I try not to give them any reason to flex the price in either direction.  Im honestly at a loss as to these quotes. 

    4) See #3, but I honestly just say Im in the middle of an interior renovation, I dont have time to focus on the driveway (for example), Id like a quote please to have the disintegrated asphalt driveway replaced with concrete. 

    5) This is alluding to work thats started and unfinished.  As stated above, these quotes are for work I havent started yet. 

    6)  I will reach out to some, thanks

    Kenneth, thanks for responding too. 

    Concrete repair = I have a pool that was built in the early 70s.  There is approximately ~3000 sq-ft of concrete decking around the pool, some of which has sunk or cracked and needs to be lifted or replaced.  This quote was to remove and replace approximately a 15' x 15' portion of that area. 

    Driveway is approximately 125' L x 10' W, no hills, bends, or any significant grade. 

    I still dont understand why the area matters?  Materials are the same within the given area and so is labor given the people I have conversed with.  How is this justified ?

    Matt = Thanks for responding.  See above, but the quotes aren't on anything I've touched yet.  As for siding, half the house is brick, so we are really only talking R&R for siding for half of an 1800 sq ft house.  Again, nothing Ive touched yet.  The only thing I've touched is the addition that doesnt have siding because its brand new.  So given that these quotes are based on work I havent started yet, any ideas ?

    Lee = thanks for responding, driveway is approximately 125' L x 10' W, no hills, bends, or any significant grade. Eye roll is right. 

    Mike = I will continue to do so.  These quotes are spanned over the last 3 years, so Im still not sure what Im doing wrong.   Thanks for responding. 
     

     Lynette = thanks for responding.  My portion of the renovation and addition is 95% complete, these are other things I havent tackled yet and dont want to spend another few years doing myself. I do have to say that after almost four years of doing this every day, Id be willing to put my work up against any professional.  I may not be as fast but the quality and knowledge of code is on par. Furthermore, regarding the contractors I have hired and surrounding neighbors have hired, Ive seen their work.  Its fast, sloppy, incomplete, not plumb, level, or square, lumpy mudding, etc.  When you are charging hourly rates like that, yes we/the homeowner expect the work to follow suit. Lastly, Im not a hoverer.  I was a mechanic in high-school and through college, and I know how bother some it is. 

    In closing, I feel like Im trying to be taken advantage of.  My goal is to get all of this off my plate so I can focus on RE investing and am using my home as a primer for finding a good contractor or gc to work with  so I can use them for my upcoming investments......and am severely striking out.  I dont agree with a contractor charging higher prices given your zip code, thats unethical to me, and unless given a justification, will continue to fight that. I have a very good idea as to what it costs be a contractor given my mentor, and he continues to keep me updated with the market, the problem is he now lives out of state and obviously can't physically help in person anymore.   I really appreciate your inputs and ask you to continue to give me inputs given my feedback above.  

    Looking forward to Re investing! 

    0Reply
  • Chris K.
    Attorney · Nashville, TN · Member since 2015 · 1k+ posts · 1k+ votes
    7y

    @Bryan Gambina

    Most contractors do not like doing proper breakdowns because it takes a lot of time to do it. If they haven't worked with you before, most contractors won't spend their time doing a breakdown for you. That's especially true since a lot of "residential" customers tend to use the breakdown as a way to get better pricing from other customers. Until you give these contractors some assurance that you won't waste their time, they will probably not spend too much time writing you a detailed breakdown. 

    That's especially true if they are in-demand contractors. For example, my construction company passes on about 90% of bid requests that we receive. Granted, most of what we do are commercial/industrial work. But even for residential contractors, they have bread-and-butter clients. If you do not fit that mold, it's hard for them to give your work any serious priority/attention. 

    How many bids have you received so far? If you tried a bunch of different contractors of different sizes and they are all over your budget, it's possible that your budget is unrealistic. But I have no idea whether that is the case since: (1) I'm not sure what exactly each bid includes in terms of scope of work; and (2) I don't know what contractors typically charge for material and labor in your area. 

    Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.

    2Reply
  • David RobertsonBusiness Member
    Flipper/Rehabber · Kansas City, MO · Member since 2010 · 755 posts · 778 votes
    7y

    The driveway is nearly 10x what I would expect it to be.  Concrete driveways in my area are typically $7 to $10/sf tops which would be $10k to $15k.

    I would seriously ask if they misplaced a decimal.

    What on earth is the quote for the landscaping at $500k?  

    FlipperForce
    WebsiteView Page
    3Reply
  • Bryan Gambina
    OP
    Member since 2018 · 8 posts · 1 vote
    7y

    David Robertson,

    I'd write a check in a heartbeat for that. 

    0Reply
  • Account Closed
    Investor · Milwaukee, WI · Member since 2013 · 1k+ posts · 1k+ votes
    7y

    In my state, contractors are required by law to write up detailed contracts. They cant just say "New roof - $10000". They must specify the work to be done, and the type of product installed. So for instance, "Tear off existing shingles and underlay. Repair, as needed, any roof decking with the same or comparable material. Install new roof, including 15lb felt, 25-Year asphalt shingle, metal valleys, drip edge...". It must be specific enough for the customer to understand what will be done and what quality of materials will be used. They do not need to tell what type of nails, but would put in a blanket statement it will be done to code and to industry standards. They are not required to put a price point on every component though, for instance separating out the labor and materials.

    After years of kids being told they all need to go to college and that the trades are for dummies, the trades are in shortage of labor and full of dummies, while a person practically needs a college education to flip burgers. Most of the contracts I see do not stand up to the requirements, and I have had to re-write them myself sometimes.

    The sentiment that contractors run from abandoned jobs can not be understated.

    "Can I get a discount if I help you?"

    "Uhm...no, actually I would need to charge you more for that."

    1Reply
  • Account Closed
    Investor · Milwaukee, WI · Member since 2013 · 1k+ posts · 1k+ votes
    7y

    I've used this tool and have found it to be pretty decent (it's fast) when trying to size up a bid, or to see if my own numbers are aligned - it's not perfect by a long-shot, but you might find it useful

    https://www.homewyse.com/

    1Reply
  • Bryan Gambina
    OP
    Member since 2018 · 8 posts · 1 vote
    7y

    Thanks for your input Merritt.  Again, none of this work is for an abandoned job, its for work that I wont get to before I'm. 40 lol. 

    0Reply
  • Victor S.
    WorldWide · Member since 2016 · 1k+ posts · 1k+ votes
    7y

    Bryan, keep shopping contractors. Get in touch with other local investors and see if they know somebody (leverage BP). Your concrete driveway calcs to $88/sq. ft - that's insane. Can you do gravel instead? (will it look ok vs the rest of the neighboring homes?) I assume you're in a country setting. As far as hvac, since you don't have the duct work, I'd expect it to be in a 5-digit price range. 

    1Reply
  • Ned CareyPro Member
    Moderator
    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
    7y

    @Bryan Gambina Now that I know you are from Columbia, I can absolutely say those are way overpriced quotes. 

    Sadly that is true.

    3Reply
  • Matthew Paul
    Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
    7y

    @Bryan Gambina The prices are a bit on the high side , But you are in Columbia , the more expensive the area , the higher the prices .  I am in Severna Park , prices are high here also . All I can say right now is a VERY good time to be a contractor . ( I am loving it ) . There is so much work we can charge what we want and pick and choose the jobs , and you will wait . I am busy till August 

    1Reply
  • Matthew Paul
    Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
    7y
    Originally posted by @Bryan Gambina:

    In closing, I feel like Im trying to be taken advantage of. 

    My goal is to get all of this off my plate so I can focus on RE investing and am using my home as a primer for finding a good contractor or gc to work with  so I can use them for my upcoming investments......and am severely striking out.  I dont agree with a contractor charging higher prices given your zip code, thats unethical to me, and unless given a justification, will continue to fight that. I have a very good idea as to what it costs be a contractor given my mentor, and he continues to keep me updated with the market, the problem is he now lives out of state and obviously can't physically help in person anymore.   I really appreciate your inputs and ask you to continue to give me inputs given my feedback above.  

    Looking forward to Re investing! 

    You are not being taken advantage of , you are just getting prices that are higher than you want to pay . A good contractor wont be cheap , they are running a full fledged business with the intent of making a profit . Prices are higher by zip code , mainly because good contractors dont work in cheap zip codes , there is no money there . Contractors also will live in expensive zip codes themselves . ( I do) . you say you have a good Idea as to what it cost to be a contractor ? I seriously doubt that , there is a whole lot more being a contractor than truck tools and insurance . Unless you are running a full fledged contracting business you have NO idea . Your  " mentor "  must not be well informed . 

    Professional Contractors dont work for " wages"  . If I wanted a wage , I would get a 9 to 5 job . But I wanted more , so I honed my skills and started a contracting business .

    4Reply
  • Bryan Gambina
    OP
    Member since 2018 · 8 posts · 1 vote
    7y

    Matthew Paul, school me then, take my example above to Patricia and tell me why I'm wrong. 

    0Reply
  • Victor S.
    WorldWide · Member since 2016 · 1k+ posts · 1k+ votes
    7y
    Originally posted by @Bryan Gambina:

    Matthew Paul, school me then, take my example above to Patricia and tell me why I'm wrong. 

     oh no you didn't, Bryan! lol don't get Matt started... i forgot to add in my post that you have to account for their overhead costs, which could be in double digits for projects, as well as any material markups.

    2Reply
  • Chris K.
    Attorney · Nashville, TN · Member since 2015 · 1k+ posts · 1k+ votes
    7y

    @Bryan Gambina

    Some thoughts: 

    • How many bids did you receive per scope? Let's say you asked five contractors and got five bids in the same ballpark. If that is the case, there's probably some kind of factor that's increasing the bids. What that can be, I have no idea.
    • In terms of how contractors determine price, it somewhat depends on how sophisticated the contractor is. Some folks just work off a rule of thumb or "gut feeling." More sophisticated contractors use various bidding software to get the most accurate quote as possible. But as a general rule, contractors price their bids by setting a target margin. For example, let's say that you are a contractor and you have a potential job that will cost you $100k. If you are aiming for a gross margin of around 40%, you need to bid around $166,666.67 to get there. On top of that number, you can start adding PITA fees and other x-factor fees. 
    • In terms of contractors charging more for labor depending on the area, it's whatever the market dictates. As a general rule, the higher the pricing, the more scrutiny you will face from the owners. So contractors that can charge more are probably "better" than contractors that can't. And by "better," I don't necessarily just mean their skills as a contractor. Maybe they are better at marketing, customer service, sales, etc. 
    • Also note that, as a general rule, contractors aim for higher margins for residential jobs than commercial jobs. Why that's the case is complicated but it mostly has to do with the fact that: (1) residential customers can be very demanding with little knowledge; and (2) commercial/industrial jobs have lower margins but much larger contracts.
    • Along those lines, the high-end residential market is a tricky market. Some people can deal with it; others can't. But the level of demand/finishing for a high-end job can truly get out of hand depending on the whims of the owner. So it's not unusual for contractors to add significant "fluff" to your bids to deal with these changes. 

    If it makes you feel any better, a contractor that aims for around 30% to 40% gross margin will end up around EBITDA around the low teens if they do everything correctly. An owner of a small contracting business may make six figures after salary and distributions (especially if the owner actually does the work). But the construction world isn't an industry with crazy margins. 

    Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.

    4Reply
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