To our readers that are contractors, the question “should a contractor breakdown their costs?” may be one you’ve heard countless times before, yet it still drives you crazy.
To our readers that are not contractors, it may seem like asking for a cost breakdown is harmless but allow us to explain why contractors should not breakdown their costs on an estimate or proposal.
You’re hiring the contractor for the service they offer, not what goes into the service. The only costs that should be broken down are options to be added to the service.
Think of this question in terms of buying a brand-new car.
When you go into the dealer and order a new car, do you question why the car’s base model price costs $28K? Do you ask the employees working at the dealership to breakdown their operating costs and back-office overhead; how much the assembly line workers make, the salesman’s fee is, or the factory paint costs? Of course not.
The same goes for contractors.
You’re choosing their base model price of a particular service, just like when you choose between car brands at different dealerships. Asking for a breakdown on their business normally suggests a homeowner does not understand how costs are broken down, that they are trying to get a sneak peek at the contractor’s overhead and profit, or looking to undermine his responsibilities as the contractor.
Furthermore, asking for a breakdown may come off as the homeowner thinking they can do a better job at managing the company’s overhead than the contractor. When really, the cost is for the years of refining the company’s service and the relationships it has developed over the years. If the homeowner asks for a cost breakdown, this conveys that the homeowner does not fully understand what they are paying for and the contractor must educate the homeowner on the service they are purchasing.
Each contractor prices their services differently.
What one contractor may do to reach a final price could be totally different from the next. Overhead costs also aren’t broken up like many homeowners may think. Contractors have advertising, office expenses, taxes, and employee salaries as some of their expenses. It’s even reported that a typical contractor can have experience overhead costs ranging from 25% to 54% of their overall revenue.
They aren’t trying to game the system or make a profit on uneducated homeowners. Contractors carefully plan out their cost and expenses so that they can remain in business, yet still offer a competitive price to customers.
As a homeowner, you could ask for a cost breakdown. There may even be contractors who offer this, but just know it’s not the norm. And if a contractor were to give a price breakdown, it may come at a fee for the desk labor involved.
By now, everyone reading this should be able to confidently answer “no”, and understand why. Contractors, just like any other business, function to fulfill a need or want while still being profitable. When going a homeowner decides to use a contractor’s service, they need to trust that the job will be completed as expected.
Like being at the dealership, if you want the car, order it. Understand and enjoy the product you’re getting. Do the proper research and know the service you are getting from a contractor, but don’t expect a full cost breakdown 100% of the time.
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