Your Next Reno - Time Plus Materials or Fixed Contract Price?
What's your hourly rate? How much an hour do you charge?
Common questions for the homeowner looking for a contractor, however the truth is except for the smallest jobs, which take more time to quote than to do, always get a fixed price for the work you want to do.
While I can see from the customers point of view that they are trying to get the best value for their renovation dollar, but really, to get the best value you want a contract price not a contract with an hourly rate plus materials known as "time plus materials," and here's why;
Hourly rates by themselves are very difficult to compare. When you hear hourly rates of different contractors it does not reflect the efficiency of the contractor. What tools does he have to to your particular job? How fast can he do the job?
In fact, I have found usually the guy charging less per hour means he has less(tools,equipment,knowledge,experience) and costs you more in the end. Also with some, the time charge starts from their door step not yours. Others have a surcharge for gas and travel. By the hour charges can vary. You need to know what is and is not included in the hourly rate and when it starts.
There can be so many variables involved when you hire by the hour. By the time
you get the final bill of what you thought was a reasonable hourly rate can really surprise you(and not in a good way)!
Also you have to watch out for worker injury liabilities. The Workers Compensation Board has certain rules that pertain to people working on an hourly basis and whether they are deemed to be independent contractors or your employees making you responsible for their insurance coverage and uninsured claims should they get injured working for you.
Often people will ask the hourly rate and then an estimate for how long its going to take. What they are really trying to do is figure out the final price. It's much better to have a fixed contract price in writing, rather than have a obscure hourly rate and the time estimated and open ended.
Contractor A has a pick up truck a mostly hand tools.30 years experience $40/hour
Contractor B has a state of the art trailer with all the latest power tools and gadgets.5 years experience $60/hr
Contractor C has a work van some hand tools,some power.15 years experience $50/hour
So who would be the best value for you? As you can see determining who to hire by using only a hourly rate would be foolish.
Really depending on the needs required for your particular job, any one of the contractors above might give you the best value for your renovation dollar.
There also many other factors to look at. For instance the health, fitness and intelligence of the contractor which leads to their overall productivity.
The contracting business has a very wide field of variety indeed with many variables. It's not like a shop rate for a mechanic where all the charges are listed in a book and time is estimated on clear procedures.
So that's why it's best to get price estimates and leave the hourly rate out of the equation.The hourly rate really has nothing to do with the job or the price of tea in china. Final price is king. You want know your bottom line before you sign the bottom line.
If a contractor will not or cannot give you a fixed price it may be telling you their not right for the job, experienced contractors in business for your dope of work have done the same job or something very familiar to it so that they can offer a firm quotation for their work.
It's not to say they don't get it wrong once in a while, or have other motives for their price such as they are too busy, or not busy enough, that's why it's always recommended to get at least three quotations to compare. Always make sure each contractor is bidding on the same job. Sometimes each contractor will include or not include certain extra services or materials, again making comparing rather tricky.
Of course getting written price quotations is just the starting point for getting the best value for your renovation dollar and a successful renovation.Will the project be completed on time, on budget, and done correctly to code?
Usually the lowest price may not give you your best value. You also want to understand what exactly the contractor can do and is going do do for you.His experience with the type of job you want to do is crucial, and checking references will be important.
A "time plus materials" arrangement can leave you unprotected but a written price quotation can mitigate a final invoice surprise.
Common questions for the homeowner looking for a contractor, however the truth is except for the smallest jobs, which take more time to quote than to do, always get a fixed price for the work you want to do.
While I can see from the customers point of view that they are trying to get the best value for their renovation dollar, but really, to get the best value you want a contract price not a contract with an hourly rate plus materials known as "time plus materials," and here's why;
Hourly rates by themselves are very difficult to compare. When you hear hourly rates of different contractors it does not reflect the efficiency of the contractor. What tools does he have to to your particular job? How fast can he do the job?
In fact, I have found usually the guy charging less per hour means he has less(tools,equipment,knowledge,experience) and costs you more in the end. Also with some, the time charge starts from their door step not yours. Others have a surcharge for gas and travel. By the hour charges can vary. You need to know what is and is not included in the hourly rate and when it starts.
There can be so many variables involved when you hire by the hour. By the time
you get the final bill of what you thought was a reasonable hourly rate can really surprise you(and not in a good way)!
Also you have to watch out for worker injury liabilities. The Workers Compensation Board has certain rules that pertain to people working on an hourly basis and whether they are deemed to be independent contractors or your employees making you responsible for their insurance coverage and uninsured claims should they get injured working for you.
Often people will ask the hourly rate and then an estimate for how long its going to take. What they are really trying to do is figure out the final price. It's much better to have a fixed contract price in writing, rather than have a obscure hourly rate and the time estimated and open ended.
Contractor A has a pick up truck a mostly hand tools.30 years experience $40/hour
Contractor B has a state of the art trailer with all the latest power tools and gadgets.5 years experience $60/hr
Contractor C has a work van some hand tools,some power.15 years experience $50/hour
So who would be the best value for you? As you can see determining who to hire by using only a hourly rate would be foolish.
Really depending on the needs required for your particular job, any one of the contractors above might give you the best value for your renovation dollar.
There also many other factors to look at. For instance the health, fitness and intelligence of the contractor which leads to their overall productivity.
The contracting business has a very wide field of variety indeed with many variables. It's not like a shop rate for a mechanic where all the charges are listed in a book and time is estimated on clear procedures.
So that's why it's best to get price estimates and leave the hourly rate out of the equation.The hourly rate really has nothing to do with the job or the price of tea in china. Final price is king. You want know your bottom line before you sign the bottom line.
If a contractor will not or cannot give you a fixed price it may be telling you their not right for the job, experienced contractors in business for your dope of work have done the same job or something very familiar to it so that they can offer a firm quotation for their work.
It's not to say they don't get it wrong once in a while, or have other motives for their price such as they are too busy, or not busy enough, that's why it's always recommended to get at least three quotations to compare. Always make sure each contractor is bidding on the same job. Sometimes each contractor will include or not include certain extra services or materials, again making comparing rather tricky.
Of course getting written price quotations is just the starting point for getting the best value for your renovation dollar and a successful renovation.Will the project be completed on time, on budget, and done correctly to code?
Usually the lowest price may not give you your best value. You also want to understand what exactly the contractor can do and is going do do for you.His experience with the type of job you want to do is crucial, and checking references will be important.
A "time plus materials" arrangement can leave you unprotected but a written price quotation can mitigate a final invoice surprise.
