What’s a fair price for your bath remodel?

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moneymanPrice, how is price arrived at? What is a fair price?

I’ll keep this short. Price is an intangible exercise for tangible results. A saying you may have heard goes something like this “He is a person who knows the cost of everything, but the value of nothing”. In other words, price and value are two different things. And having price as your first concern may not be in your best interests.

This happened to me, a potential client gave me her wish list and wanted a kitchen and bath within a set budget, so far, so good. The products she wanted and the scope of work came out to significantly more than her budget. I gave her the price, offered some options and did not get much further with this person. I called back two weeks later and was told by the woman that she not only found someone to do the work for her budget, but that they were doing even more work for the same amount? OK, how?

Here’s a little estimating work to consider:

Bath Remodel

  • Permit=$1000
  • Plumbing fixtures=$3600
  • Electric=$1100
  • Demo and build=$3200
  • Tile=$2500

Overhead and profit included for the total of $13,480 from my company.

Other guy bids $9100, wow what a great deal, but wait, if my hard costs are about $8000, how will someone else do this job for $1100 over cost. Baths take about 120 man hours to do, plus a contractors costs for insurance, tools and so on. So my competitor is working for $9.00 an hour and providing for business expenses. Sure, and I can get a brand new Cadillac for the same price as a lawn tractor.

My point then is for the lower price you will not get the same value. You will get fixtures of a lessor quality and most likely work that won’t meet your expectations. Yes its a lower price, but is it a better price? In all businesses you will find lower cost products that don’t actually compete with the higher priced products. Does a sports coat from Walmarts have the same fit and feel as a sports coat from JosBanks? Does a McDonalds hamburger compare with a ribeye steak, after all they’re both beef? Price is what you pay and value is what you get out of something. The sound of a Steinway piano will always be more pleasing to the ear than the sound of a Casio keyboard, but they’re both pianos, so why pay more? You pay more because in the long run in what really matters when making a purchase is that the ultimate satisfaction comes when you know you have something of quality that will last, something that gives you comfort and maybe even something you can impress friends with. Where would you go to impress a dinner guest, White Castle or Murry’s steak house? Murry’s, but isn’t that a higher price?

Value, not everyone cares to understand value, children don’t, they always go for the biggest pile of candy, not understanding that the smaller pile has the candy they like best. Adults (myself included) can be led into making the wrong decision by a bigger pile of candy.

So what’s a fair price? If I buy something that does what I was told it would do and I was happy with the way it looks and performs, then whatever I paid was a fair price. If I bought something for half as much that I was disappointed in, then I paid too much. Value for me is getting what I expected to get, price is what I agreed to pay.

Paul Lesieur/ Silvertree

3 COMMENTS

  1. Paul,
    You definately justify the value built into your price. This works for some customers but not all, especially in this economy. The way I see it you have two choices, either continue as you have and forego the frugal customers, or sell less expensive products such as the plumbing fixtures. I have on occasion let the customer purchase the plumbing fistures. This way my warranty is on the installation of these products only (they were warned right?) Another way to save on costs is to only permit the plumbing and/or electrical part of the project. In my area permits are not required for cabinets, countertops, tile, etc.

  2. Hello Paul,

    The reason for the difference is in your description of the problem. Value exists, and will EVENTUALLY be disclosed. Your competitor and the owner do not understand this and cannot be educated in 99% of the cases. We have all heard about people going broke in the middle of a project, warranties being denied because of poor installation or bankrupt contractors, lawsuit costs, etc. etc. etc.

    There is a prospect profile for whom these risks are acceptable…it is not really ignorance but human nature. I believe our only defense against this situation lies in managing expectations, especially our own. Prospects want free consulting…again human nature…and governing how much you allow before a financial commitment is one strategy. The other, quite honestly, is more aggressive marketing to increase the number of opportunities to meet the RIGHT client.

    After 30+ years in this business I have never seen a more difficult time, and it will not be over for a while yet. Good luck to all of you and be thankful (as I am) for the clients who understand the value proposition and invite us to take their homes in our competent hands.

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