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Why Do Some Remodel Contractors Cost More Than Others?

When exploring their options for home remodeling, homeowners often encounter a puzzling scenario. For the same exact project, different contractors’ estimates come in at vastly different costs. You might find yourself wanting to work with a contractor who bills themselves as being “high quality,” but struggle to justify the cost if somebody else claims to be able to do it for significantly less. If this sounds familiar, it’s important to understand why some remodel contractors cost more than others before you decide which contractor to hire.

At Lamont Bros. Design & Construction, we understand this dilemma homeowners face. As a team of seasoned professionals in the Portland remodeling industry, we work with clients every day who are navigating the often confusing process of sorting through contractor bids. Throughout our years in the home remodeling industry, we’ve submitted the highest and the lowest estimates on various projects for different homeowners. If you’re looking to understand what affects contractors’ pricing and why some charge a higher cost than others, you’ve come to the right place.

By the end of this article, you’ll have a clearer understanding of why some contractors cost more than others and how to evaluate the cost in the context of the value they provide. This insight will enable you to make informed decisions and hire the right contractor for your specific needs. We’ll explore key elements that influence contractor pricing, including:

I. Experience and Expertise

One of the primary factors influencing the cost of remodel contractors is their level of experience and expertise. More experienced contractors often know that they need to charge more for their services. Inexperienced contractors often don’t have the experience to know what they need to charge in order to sustain their business. If a contractor underestimates a project’s cost, they either charge you more than they said originally, disappear without completing the project, or go out of business.

Higher Cost for More Experienced Remodel Contractors

Experienced contractors bring a wealth of industry knowledge and a proven track record to your project.  A contractor who bills more based on experience will typically have handled dozens of projects just like yours. During these past projects, they’ve navigated countless challenges and delivered quality results consistently. This expertise often translates into a higher cost. But why pay more for experience?

second story addition under construction
For complex projects like additions, it’s especially important to work with a contractor who has experience in this type of work.

The Risk Associated with Less Experienced Contractors

Opting for a less experienced contractor might seem like a cost-effective choice initially. However, this decision carries inherent risks. Less experienced contractors might come at a lower cost but often lack the necessary skills to handle any challenges that arise during a remodel.

A few years ago, our team was hired by a homeowner to complete a kitchen remodel that had been started by another contractor. Our team eventually learned that the previous contractor had been fired and kicked off the job site after failing several times to pass inspections. Unfortunately, experiences like this are common where a contractor claims to be able to do a job when in reality they lack the experience to do it well.

Now, not every remodeling project goes this way. It could be that hiring an inexperienced contractor goes off without a hitch and you end up with a great remodel. However, it does carry a higher risk for potential quality issues, delays, and often, increased costs due to mistakes that could have been avoided.

Predictability and Reliability

When you choose a contractor with experience in the type of remodel you are doing, you’re not just paying for their ability to swing a hammer or draft a plan. You’re investing in the peace of mind that comes with a contractor who has been through countless projects just like yours before.

Contractors with this level of experience have a proven track record and are more reliable. They have a history of successful projects and satisfied clients, which means they know how to deliver the desired outcome within the agreed timeframe and budget.

II. Services Offered

The scope of services offered by a remodeling contractor is a key factor that determines their pricing. Certain services can add value to your remodeling experience but also contribute to the overall cost. Let’s explore some of these services:

Integrated Design and Construction

Contractors offering integrated design and construction services bring together designers and builders under one roof. This approach facilitates more team collaboration, ensuring that designs align with the client’s needs and budget.

While this means more professionals are involved in your project, which can increase the cost, it also improves the likelihood of a successful, cohesive outcome.

remodel design meeting
A contractor who offers design services may cost more than those who do not.

Showrooms

Some contractors maintain showrooms where clients can view product offerings and attend meetings with their remodeling team. Showrooms provide a tangible way for homeowners to visualize and make decisions for their project, making the design process easier.

However, the overhead of maintaining a physical space like this is factored into the contractor’s costs.

Product & Material Ordering

A contractor who handles the purchasing and coordination of materials and products offers a significant convenience to homeowners.

This service saves you the time and hassle of having to procure everything yourself but requires additional personnel, warehouse space, and logistical management, all of which come at an additional cost.

Project Management

Effective project management is critical to the smooth execution of a remodel. This involves administrative personnel who oversee permitting, enforce the project schedule, and coordinate with design and construction staff to ensure your project is built correctly.

Good project management can greatly enhance the efficiency of a project but also adds to the contractor’s costs.

In-House Construction Teams

Contractors with in-house construction teams, as opposed to those who subcontract out significant portions of the work, can offer more direct control over the processes and quality of work.

This can lead to higher consistency and accountability in the execution of the project. Depending on the trade, hiring in-house construction teams may increase the cost. However, it often results in a higher quality outcome.

Working with contractors who service their projects with in-house construction teams may offer more control over the final product quality.

III. Reputation and Demand

The reputation and demand for a contractor also impact how much they can charge compared to their competitors. A well-regarded reputation in the industry often leads to increased demand for a contractor’s services, which in turn influences their pricing.

Established Contractors with Good Reputations

Remodel contractors who have established a good reputation over the years are likely to be in higher demand. A strong reputation is typically built on a history of successful projects and satisfied clients, signaling reliability and quality to future prospects.

As demand for their services increases, remodel contractors with a good reputation can command a higher cost. This is a basic principle of supply and demand. When a service provider is highly sought after, they have the leverage to set higher prices, reflecting the renown and quality of their work.

For example, The Neil Kelly Company is one of the most established remodeling contractors in the NW. Their reputation and history of reliable services influence their pricing, as their clients are willing to pay more for a remodeling contractor with a recognizable name and reputation.

Contractors with a stronger reputation may charge more for their services due to higher popularity and demand.

Contractors with Poor or No Reputation

On the other hand, contractors with poor or no reputations present a different set of challenges. Those with a negative reputation may struggle to find clients, leading them to lower their prices to attract business. The risk here for homeowners is the potential for subpar work, as these contractors may not have a track record of delivering quality results.

Similarly, new contractors without an established reputation might offer lower prices to enter the market and build their client base. While this can be a cost-effective option, it carries the risk of working with an inexperienced contractor. You may find inconsistency and unpredictability in the quality of work. Homeowners need to weigh the potential savings against the risks of hiring a less established contractor.

Trade-off Between Cost and Reputation

By opting for a contractor with a strong reputation, you’re more likely to engage someone who is motivated to maintain that reputation by delivering high-quality work. They have a vested interest in ensuring your project’s success, as each project contributes to their professional standing.

For some homeowners, this alone justifies the higher cost, as you’re paying for a level of assurance and quality that less established contractors may not provide.

IV. Project-Specific Factors

When deciding whether or not you should hire a contractor who costs more, it’s important to consider how project-specific factors can influence pricing. Different types of projects require varying levels of service, expertise, and resources, which can significantly impact the cost.

Assessing the Level of Service Needed

For simpler projects, such as basic installations or minor repairs and renovations, the level of service and expertise required may be less. In these cases, hiring a contractor at a lower cost might be a more viable option without significantly compromising on quality.

Complex Projects Require Specialized Expertise

However, for more complex projects like a full-scale kitchen remodel or a home addition, the need for more experience and specialized expertise becomes critical. These projects often involve complex designs, structural changes, and made-to-measure materials and fixtures.

Contractors with more experience and a broader range of services are better equipped to handle these challenges.

Matching Project Needs with Contractor Expertise

It is also wise for homeowners to match their project’s specific needs with the correct expertise and service. While it might be tempting to choose a lower-cost option for a complex project, this could lead to issues down the line, such as delays, additional costs due to mistakes, or unsatisfactory work quality.

You’ll be much better off hiring a contractor with plenty of relevant experience in the exact type of project you’re doing. Whether it’s a luxury primary bathroom remodel, basement renovation, or any other form of major home improvement, find someone who is an expert in that type of project.

Evaluating Cost vs. Value

In the context of hiring a remodel contractor, understanding the balance between cost and value is another key part of making the best decision. Here are a few reasons why you might hire a low-cost contractor and a few reasons to spend the extra money.

Scenarios Where Lower-Cost Remodel Contractors Make Sense

There are scenarios where choosing a more affordable contractor is sensible. For straightforward projects with minimal risk, a less expensive contractor might provide adequate service without the need for extensive expertise or resources.

  • The scope involves only simple repairs (handyman work)
  • You need single-item installations (bookshelves, built-in office cabinets, faucets)
  • The primary purpose of the renovation is a short-term investment (house flipping)

Investing in Higher-Cost Remodel Contractors for Complex Projects

Conversely, investing in a higher-cost contractor is often more appropriate for complex, high-stakes projects. The higher cost is justified by the peace of mind, reduced risk, and potentially higher return on investment in terms of the project’s success and long-term value to your home.

  • The scope is extensive and involves many different design elements (major renovation)
  • You need multiple products ordered and installed (kitchen cabinets, appliances, backsplash, etc.)
  • The purpose of the renovation is to enhance your lifestyle (Your forever home)
  • Your project requires a lot of custom work (Home addition, custom kitchen or bath)

Want Expert Advice on How to Hire a Great Contractor?

Now that you understand more about why some remodel contractors cost more than others, do you feel more comfortable making a choice that you know will benefit you and your home? If you’re still considering your options and want to better understand how to evaluate the contractors in your area, download our free Contractor Selection Guide. In it, you’ll find expert advice and industry best practices to help you find a contractor who is a great fit for your project.

Ready to start designing your remodel, but not sure where to start? If so, click the link below to schedule a free design consultation with a member of our team. We’ll help you understand what to expect from the remodel design process and set you up for a great remodeling experience.