The Crucial Difference between the Cost and Price of a Project

This blog may be the most important blog you ever read about home renovations. Interestingly enough, it has very little to do with construction. Intrigued? Before trying to validate that audacious statement, let's start this blog with a scenario that, if you’re honest, has most likely played out many, many times in your life.

The scenario is you’re shopping at a store. Let’s call it a local clothing store in your downtown. As you shop, you find an item you'd like to buy. You pick it up, look at the price, and put it back down, thinking, "I'll just go online later and find something similar for cheaper."

We do this for food, household goods, and lawn care products. We even do this for far more consequential things in our lives, like cars and health insurance.

The reality is most people are naturally driven solely by pricepoint, not cost.

As a construction company specializing in custom renovations and high-quality repair work, we are constantly navigating the challenge of educating clients not solely on the pricepoint of the project, but the cost of the project. And those are two very different things.

So, what is the difference between the price point of a project and the cost of a project?

You may be saying, "A project costs what it costs. There's a dollar amount associated with it, and that's what it costs. It costs less if I pick a contractor that quotes it for less. If I pick less expensive fixtures, it costs less. If I do it myself, it costs even less."

Wrong. Pricepoint is the monetary amount it takes to complete your project. The cost is the holistic investment you make to accomplish the goal. Pricepoint fluctuates depending on which route you take, but the cost is always the same. Whether you do it yourself or hire a turnkey contractor to handle everything, it always costs the same.

Big or small projects ultimately cost four things: quality, expertise, effort, and time. That's what you pay for. We weigh these costs daily in everything we buy. Take the example of going out to eat versus cooking the same meal at home. Could you make a filet mignon meal at home for cheaper? Sure. But you'll need to research the right recipe (expertise and time), buy the right ingredients (time and quality), and make sure you have the proper cooking materials in your kitchen (quality). Finally, you have to cook it correctly (expertise and effort). So, on the one hand, you can order it at a restaurant and have the meal show up 15 minutes later (at a higher price point), or you can spend half the day rolling the dice on if you can cook the steak medium rare. And guess what? If it’s wrong at the restaurant, you send it back. At home? Looks like it’s mac and cheese (or overcooked steak) tonight.

This same calculus, albeit at a much larger scale, goes into your home renovation project. Everything boils down to what you value.

We must acknowledge that value is subjective before understanding how this plays out for a project. For some people, a lower price point with absorbing the cost in other ways - time, expertise, quality - is a worthwhile or even necessary trade-off. For example, we recently had a potential client who decided against working with us, not because they had a poor experience but because they felt that the value we provided as a turnkey contractor wasn't worth the investment. They wanted to absorb the cost of handling the project on their own. We also recently had clients tell us, "You were the most expensive of the quotes, but we've had bad experiences in the past and don't want to run the risk of it happening again." They had experienced the project costs, namely in quality and time, and wanted to avoid them this time around.

You may have noticed in the previous paragraph that our contractor model is turnkey. As a turnkey contractor, we handle everything. We take care of the management, oversight, quality control, purchase of all materials, etc. Or, put another way, illustrated here, the burden of responsibility for the project rests solely on our shoulders. We handle anything outside the initial design and selection of fixtures and finishes.

The value of working with this type of contractor typically means that you don't absorb any other costs at a higher price point. You don't spend any time managing subcontractors. You don't ensure costs are under control. You don't troubleshoot problems or supply chain issues. You don't need to worry about the quality of the work. You don’t do any of the work.

However, once you start seeking to lower the price point, you don't just save money; you begin to carry the burden of a project in the form of other costs. Here are three common ways clients seek to do this. As you can see, on the surface, providing materials or handling part of the project yourself can save costs, but you pay in other ways. To reiterate, going this route isn't necessarily wrong. However, it illustrates that the experience you seek may be compromised based on these measures. Or, put another way: make sure you understand the hidden costs that come with how you’d like to handle your project.

Conclusion:

Now that you understand what the actual cost of a project is and that this cost never changes, you have to ask this question:

What is most valuable to me?

Suppose you value an experience that minimizes stress, keeps tight timelines, delivers top quality, and handles all the problems before they come. In that case, you're in the market for a turnkey approach like the one we offer. Any other option where you are playing a role, even at a discounted price point, means that you're paying in different ways - in your time, effort, and, ultimately, stress. Ultimately, you spend money on what you value, but when you're renovating, ensure you know not just the price but the cost.