Home Remodelers Survival Guide #4: 16 Methods Contractors Use to Lower Prices

Sadly, many contractors believe that the individual who can come up with a low price gets awarded the most jobs. This is definitely an easier way of selling due to fewer sales resistance and the ability to fill up an empty schedule. But eventually it will catch up with him – sooner or later he will find himself broke and out of business. It’s inevitable.
 If you’re saying to yourself, “So what if he goes out of business – that’s his problem,” consider this:
It could be during your project that he discovers he is out of business!
Below I’ve listed some of the methods I have seen used by contractors, both knowingly and
unknowingly, in an attempt to maintain low prices in order to win your project. There’s probably many more. These are some of the most common ways:
1.Unrealistic allowances.
2.Not accurately accounting for the proper amount of time necessary to complete the correction. Taking shortcuts.
3.Using poor quality materials.
4.Hiring inexpensive, unskilled labor; people who have not had the proper training.
5.Hiring inexpensive trade or subcontractors.
6.Doesn’t carry the proper insurance or carries no insurance.
7.Simply underestimating due to lack of thoroughly “thinking through” the job.
8.Inadequate safety precautions on his job sites.
9.Paying workers with cash (under-the-table), avoiding taxes and insurance.
10.No benefits for employees, i.e. health insurance, vacations, 401K, holiday pay, etc.
11.Plans on charging more once the job has started by intentionally leaving things out.
12.No long-term warranty.
13.Typically doesn’t stick to a schedule.
14.Disposes of debris illegally.
15.Avoids paying payroll taxes to the IRS.
16.Inadequate dust control and surface protection.
Remember this…
If a contractor is forced, albeit intentionally or unintentionally, to work for prices so
low they can’t make a profit, they can’t help but deliver products and services that are
of very little value to you.
Is that what you really want?
Again, be careful not to let price alone drive your decision-making process.