What is "Fair" Pricing, and How Can You Tell if You're Getting It?
"Fair" pricing doesn't mean "low," it means...fair.
That could mean that it's higher than you'd like as a customer, because there are legit challenges to your specific project, supply chain issues, and/or you're a huge pain in the ass. Those are legit reasons to see a higher than "normal" price.
Construction prices can vary even across the same block - if one site has room for parking, laydown yard for materials and storage, and easily accessed utilities, it’ll be a lot easier [read: cheaper] for the GC and subs to do their work.
Legit costs, legit challenges, legit risk - those are all fine.
But sorry, I'm not paying a 2500% markup on cans of paint or paying $150/hr for a laborer who can't frame their way out of a paper bag because some shady GC thinks I'm a pushover.
Customers and clients have very little idea what goes into construction, design, etc - and the costs of running those kinds of businesses.
That also leaves them vulnerable, and easily taken advantage of.
That's why it’s imperative that owners have good advisors they can trust - like an owner’s rep, architect, etc - they can help owners understand whether a price is legit, or whether it's BS.
I personally have no problem paying for - or charging for - quality. Quality costs money. Good, highly skilled tradesmen, GCs, architects, and other building industry pros are hard to come by, and worth the premium [most of the time]. They'll charge you real money, and deliver real value.
What we're all trying to avoid here is paying top dollar for crappy work, or because the GC "doesn't want the job" so he's going to charge you a bunch. I don't know about you, but I sure as hell don't want someone working on my project who "doesn't want to" and who is charging me a premium to boot.
That's different than someone who is *very good* and *very busy* - they're in demand because they're good, and they're charging accordingly. They should *want* your job.
I've been a GC and an architect - and let me tell you, neither one is an easy business to make money in. But trading on folks' lack of knowledge, taking advantage, and blustering about "covidsupplychainmaterialcostsmumblemumblemumble" is not ok, and on behalf of my clients, I won't stand for it.
"But architects are terrible" or whatever crappy GCs say? Ok, find a good one then. Some of them really are terrible, and they know nothing about construction. So don't hire those guys. Hire a legit pro who knows their stuff, and be prepared to pay for it...and to reap the rewards.
And finally, I think one of the best ways to ensure you’re getting fair pricing is to…understand what you’re buying. If you understand the value, and the tasks/scope, you’re more able to assess whether a price is far or not.
We find this is a problem with folks assessing our fees all the time - those who are new to the industry negotiate the wrong things, or push us to delete necessary services, because they don’t understand what they need.
Same thing happens with every industry. Someone who’s not familiar with what scopes should be included, or what tasks are included in that scope, won’t know how or what to push back on in a price.
As usual, the key is to round out your team with trustworthy pros who can advise you. As you’re building that team, some other things you can do:
Find others in the industry who are willing to advise you on an informal basis
Ask reputable folks in the industry which subs, consultants, etc they work with
Don’t rely on any pricing information you find on the internet - in addition to usually being dead wrong, it also doesn’t take into account the particularities of each project
Get as many quotes as possible for a certain scope of work, and compare them, deeply - make a spreadsheet, ask a ton of questions, note who has included what, and how they advise you
Get to know some estimators, and ask them how they compare quotes. When I was an estimator, everyone wanted to know cost information from me, and they missed what was even more valuable: how I was able to determine what I was buying. After all, it doesn’t matter if it’s a “great price” if you’re not getting what you need.
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