You’ve heard the term sticker shock by now. As a builder and home remodel specialist, I’m no stranger to the “You’re kidding me!” face. After all those home renovation shows and blogs convinced you that the remodel of your dreams was within your grasp, three quotes later you are facing the cold reality that remodel is expensive. Very expensive. Often too expensive. How frustrating! But why? Where does all that money go?!
I’ll start by sharing a “gift” I get from each of my supply houses every year around the holidays (image below.) Boom. It’s like a bomb going off in my office. All the proposals I’m working on have to be redone to account for the increased cost of materials. Calls to potential clients follow and some budgets are stretched beyond comfort. I would love to say “It’s COVID’s fault!” or “They’re price gouging!” but that over-simplifies a complex issue and supply is only part of it.
But isn’t that increase predictable? Sure. To some degree, these regular cost increases can be anticipated along with increases in taxes, cost-of-living wage increases, fuel costs, labor costs, and to top it all off, insurance costs. When we get our insurance quotes for the year, you can bet our providers see the “You’re kidding me!” face too.
Liability Insurance:
As the cost of a home goes up, and the cost of a remodel goes up, the value of the completed work also goes up. This causes an increase in liability insurance costs (to pay out in the event of accidental property damage).
Workman’s Compensation:
As the cost of labor increases (due mainly to limited supply of skilled tradesmen and high demand for services), and the cost of medical care increases, the cost of Workman’s Compensation coverage also increases.
Commercial Auto insurance:
As the cost of auto accidents goes up (from higher cost vehicles, higher medical costs, increased time on the road, multiple drivers, and high payouts for personal injury etc.) so do the costs of auto insurance. (Again over-simplified). When transferring a personal vehicle over to our company policy a few years ago, I saw a premium increase of over 300%!
A few additional factors to consider:
Location: Prices for goods vary in different parts of the US same as they do worldwide.
Access: A project in the woods, on a mountain, on a busy road, or on the third floor costs more than one in ideal conditions.
Weather: Depending on the project, weather can play a significant role in the cost of a project.
Holidays: Mid-project holidays can negatively affect price.
Duration: The longer it takes, the more it will cost. So if there are fewer qualified people to do the work and supplies are taking longer to get, the price will go up.
I’ll save the full dissertation on project costing for another time, and suffice to say, there are literally hundreds of factors involved in determining the cost and resulting price for a given project, and the numbers you receive can vary a lot from contractor to contractor. It’s not as simple as time and materials spent.
The best thing you can do is talk to a reputable builder who is licensed and insured. At VADA, we are honest and upfront about pricing, and we take the time to properly cost out your project. The last thing you want is to get sold on a price only to find out mid-project that the work costs more than you planned on paying. You can imagine what happens next!
