A Prospective Customer Asks: “How Can Estimates Be So Different?”
I received an email from a prospective kitchen remodel customer a few days ago and got their permission to respond via a blog post. My hope is to answer their concern and then hopefully others will chime in with their comments and views.
The prospect’s email reads:
Paul, Thank you for spending the time to meet with Dave and me last week to discuss the planning of our kitchen remodel. As we discussed with you, we did meet with another kitchen specialist last night.
After the two meetings we find that we are more confused than ever about the information we received. At the end of our meeting with you, you advised us that we should have a budget of between $70,000 and $80,000 to complete the project. At the conclusion of our meeting with the other gentleman he said that this was a project that could be completed for between $30,000 and $40,000. This is a significant difference and the reality is that we just don’t know which of you is right or understand why the estimates are so different.
We are not criticizing your estimate and recognize that his may be the one that’s out of line, but only ask you if you could take a few minutes to describe why these numbers are so incredibly different.
Thank you in advance for your help.
Dave & Joan
My response in real-time (right here – right now – on the blog)
Dave & Joan,
Thank you for the opportunity to expand on your questions and concerns and thank you for letting me do this in public on the blog. As I briefly explained on the phone, this is not an unusual situation and other readers of the blog may gain from this.
First, let’s set the stage for the readers. This is a project that is in its infancy (there are no plans or specifications for the project). I do not know the other company, but I have no reason to question their professionalism or abilities. I can only explain how I came to my estimate – I cannot explain nor will I speculate how they arrived at their’s.
Now let’s look at some of the specifics of what I heard from you and some of the ideas we bounced around. Note, I will not use ”quotation marks” for your ideas, statements or comments as, at best, I am paraphrasing what I thought I heard. If I heard wrong, it may explain some of the difference. For each of the items below you should ask yourself – was the same information discussed with both parties?
1. I heard – This is a complete gut and redo. Putting lipstick on a pig is not being considered.
2. We discussed the possibility of opening a wall that currently exists between the kitchen and the family room with a breakfast bar type configuration. Based on my short inspection, I believe this is a bearing wall and that it contains several plumbing/heating runs to the second floor. All must be relocated – I’m assuming the worst.
3. We discussed the desire to eliminate the soffits that run around the perimeter of the kitchen above the wall cabinets. Based on the fact that your electric service is mounted on the exterior kitchen wall, my experience tells me that the electricians ran all of their home runs through these soffits – these will all need to be relocated and there is the possibility that we may need to conceal a junction box in one of the upper cabinets.
4. You indicated that you were considering light stained very traditional cabinetry with darker highlights in the finish (similar to something a neighbor has). Based on that description I assumed we were at least discussing a semi-custom cabinet line (5 piece door and drawer fronts, real wood, glazed finish) – not a “big-box” store cabinet.
5. You indicated that you did briefly look at appliances and that you were leaning towards KitchenAid – stainless steel.
6. You indicated upper-end countertops (tile and laminate were not considered).
7. The existing floor is tile – you would like a wood floor in the kitchen and breakfast nook (approx. 300 square feet).
8. The sliding glass door and window in the kitchen should be upgraded – while this work is being done. We further discussed Pella with enclosed mini blinds.
9. You would like to explore the possibility to get a prep sink incorporated into the plan.
10. You indicated that you had looked at some plumbing fixtures and that you were certain you wanted Kohler brushed nickel finish and a white farmhouse sink.
While I took two pages of notes, I would like to simply analyze just the ten items mentioned above. My notes on these items look like this.
1. (from above) No dollar amount associated.
2. (from above) $4,000 – $5,000. This is simply a WAG (Wild Assed Guess). Until some investigation and as-built drawings are done, it is only a WAG.
3. $2,000 – $3,000. Again, I’m guessing and hopefully being cautious.
4. $20,000. One more time, just a WAG. I cannot predict what you will actually select. This is a number that could be $15,000 or $35,000. I choose what I believed to be a reasonable number after listening to you describe your cabinet desires.
5. This is a SEG (Somewhat Educated Guess). We did a kitchen just 6 months ago with all KitchenAid appliances. That bill was $13,400.
6. I guessed granite as an upper end countertop – SEG = $9,000.
7. Approximately 300 SF at $7.75 per SF is $2,325.
8. Pella door and window with some bells and whistles (not all) – SEG = $3,000.
9. New plumbing and repair finished basement to original state – WAG = $1,000.
10. Plumbing fixtures $2,500. I took a WAG on the farm sink at $1,200 (the last farm sink we installed was $4,400).
The total for the ten items above (lower end) equals $57,225. The ten items above have not yet considered: backsplash, light fixtures, permits, design, in-house labor (set-up, dust protection, project management, tear-out, cabinet install, drywall…) paint, engineer fees, dumpster(s)… Let’s just throw-in another $20,000 for these items. This brings the total estimate to $77,225.
The end result may show that I was conservative (high) in my initial WAGs – maybe by as much as 10 – 15%. If the other company is a large volume company, they may get slightly lower prices than us – but certainly not 50% lower.
You may want to ask the other estimator to provide some ballpark numbers for the ten items above. My best guess is that you have an “apples to oranges” comparison here. This is very common when detailed plans and specifications are not available.
I hope this explains how I arrived at my initial “ballpark” estimate. If you have other questions, please don’t hesitate to contact me and please follow this post – I hope others will chime in.
Thanks for the opportunity to be of service.
Paul
As always – Enjoy!
23 comments
Paul & Dave & Joan,
Neither estimate seems out of line. Confusing? Of course! You’re not the only one.
A homeowner’s concern when looking at pricing can often get confused when comparing two different estimates. Kitchen remodels can be done for 30-40k or 60-80k. It would be hopeful that they aren’t the same in scope, material selection, and quality. I’m not here to qualify or dis-qualify either contractor in this situation.
I encourage my clients to look at their financial investment goals first, and tell us what they want to invest – we’re not their financial advisor!
So the choice now is (reasonably assuming that these 2 estimates are not equal in scope nor quality of materials) – without looking at either estimate – what investment do you want to make in your kitchen?
I don’t know either contractor, but I do like DaVinci’s website and info. I would guess that if 60-80k is more than you’re willing to invest right now, they would help you with different choices (often material choices can make a huge difference – or a small but important design choice) to reach your financial goals as well.
You may also come to the conclusion that you have the 60-80 taste, and need to wait ’til next year when you can invest that into your kitchen!
Please do beware of contractors who are doing work at cut-rate prices. I’m seeing more of them lately, and the more cut-throat people get at their competitors, the more they start screwing their clients, too. I don’t want to see you there!
with respect to Joan and Dave — This is an excellent exercise, a question that I often tackle (usually offline); it has value for many who will come after. Paul makes a great case in support of how he arrived at his numbers and does so (in the form of this post) most diplomatically. It is often difficult for anyone to price something that is not even fully conceived. . . that said, at this juncture, I feel it is often wise for everyone involved to err on the side of ” conservativism”. I do notice that many of the items called out above do fall on the higher end of the spectrum and with that — I’ll say – you don’t take your Porsche to Jiffy Lube, if you know what I mean. Great post and good luck to all involved.
Please do beware of contractors who are doing work at cut-rate prices.
I agree with phrase above.
Paul & Dave & Joan & Tim,
First, thanks Paul for an engaging post.
Second, thanks to Dave and Joan for providing the material for a topic that permeates the remodeling/contracting industry. You are not alone in your confusion and exploring options via this blog and in an open forum will surely lead to you making a better informed decision, regardless of the path you choose.
Finally, Tim, I agree and thanks. Both estimates seem reasonable when we recognize that materials selection, personal taste, and construction approach vary widely.
For this reason alone, Dave and Joan will benefit by taking another, more detailed review of wants and needs.
It’s like peeling back the layers of an onion. The first set of bids, the outer layer, were wide ranging because the definition of specific requirements was too loose.
The next round, with refinements describing specific needs around materials and workmanship, may result in bids that are more comparable and less prone to surprises. They may also provide opportunity for the contractors you entertain to demonstrate the value of their approach and examples of past projects to help you make a decision that you can be proud of and satisfied with in the years to come.
Great post and very helpful to anyone thinking of embarking on a remodel project.
Thanks,
Mike
Great piece. I’m tempted to print it and hand it to everyone who says “But, I just need a price to know who to choose.” when no plans or specs have been submitted.
When a project’s this early into the process I won’t talk about prices in anything other than very vague terms until I get a budget from the customer to work into. If they don’t know what their budget is then we stop and figure out what it is. Asking different contractors to come up with a number without providing plans is a waste of time all around.
The question has to be changed from “How much does this cost” to “Can you do this to this level of finish for X dollars.” Working into a budget empowers the client and keeps everybody honest.
Paul, very nice read, good explanation & excellent topic. One of my favorite quotes on estimating was “I can design you a $10,000 bathroom or a $100,000 bathroom – which would you prefer?”
Paul- this is an excellent post. You did a great job of describing the assessment you made and the numbers you were assigning to them. It makes a great case for why it is so important to have a design and a scope of work with specifications BEFORE asking for estimates. It is impossible to get any true comparison without having the details worked out ahead of time. I hope that the potential clients read this post and realize how lucky they are to have someone as thorough and thoughtful as you appear to be as their potential remodeler. Good luck!
Good post.
Without a plan or product selections you get an estimate which can change quickly as you find a low estimate did not cover your wants and needs.
A bid is something different, a contractor has taken detailed notes and is specifically pricing your job based on details he and the customer agreed on.
In all Paul approaches this project in a smart and honest way.
Great post Paul, and great attention to detail.
Great article.
The kitchen you described can’t be done for $40,000 and they want the appliances included in that number, is that correct?
It looks like the other contractor either doesn’t know what it is going to take to do the job or he is lowballing them to get the job started and then once the job is started hit them with the real numbers.
Wow! What a response. First of all thank you to all that posted a comment, posted on the forums and/or sent me an email directly. Normally, I would have thanked and responded to each individual comment, but I didn’t want the appearance that I was somehow “steering” the conversation.
Now that things have slowed down, I would like to thank Dave & Joan for letting me do this. They watched the responses, sent me an email last night, and I just got off the phone with Joan a few minutes ago.
We discussed the fact that believing anyone could realistically provide a “good” estimate without plans and specifications, is just wishing (I wish I was taller). We discussed that the next step would be to at least get started on a preliminary plan and specifications, which could then be tweaked and modified as necessary to meet the defined budget goal. It’s important to also note that there is a laundry list of things they would like to have done to the house – beyond the kitchen. But the kitchen is the hub or focal point of the overall remodel.
The end result is that we have been hired (or will be on July 5th) to begin the design and exploratory process.
Again, thanks to everyone that participated in this social remodeling experiment. Assuming the design, budgetary and construction needs can be met, we will post on the progress of the project.
Paul
Enjoy!
Wow! Very well done by both parties. Thanks for sharing this story.
Thanks Chad – the key is that “both” parties done well!
One of the best blog entries I’ve read. And a very honest and realistic appraisal of the circumstances.
Bill
Thanks Bill! This was incredibly fun!
Great post Paul! It would be great to continue posting about this project so others can see the story unfold.
Paul,
You have done a wonderful job of presenting a behind the scenes view of how a professional company approaches a complex project fairly & correctly.
You have done your clients and our industry a kind service with this open approach.
I tip my hat to you, and keep up the good work.
Clifton Hyatt
HighGate Restoration
Great Blog post. A good learning tool for both a homeowner and a contractor. I second Handyman’s idea on continuing post on this project.
Paul
It’s gratifying to see another contractor with enough integrity and confidence to justify how you arrived at this estimated number, which I beleive to be realistic even though the job can be done for the 30-40,000, just not the same job and I know that.
I am glad I dont have to compete with you for jobs.
Thanks for showing that integrity still exists with at least some contractors and the way you handled this.
To: Dave and Joan
I commend you as wise enough to ask why the price is so cheap as opposed to accusing Paul of being so expensive.
You are in search of value and asking the right questions and in an honest way, something us contractors seldom see anymore with potential customers.
If you choose on price alone it is a guaranteed mistake.
Choose by level of ability to provide your definition of quality, reliability, integrity and honesty.
Choose a contractor you like and feel comfortable with to help you get what you want.
Good luck to all parties, you guys seem like a good match.
Sheldon
This is great information for anybody who is planning on a major remodeling project. Great concept to put it up as part of your blog.
Thanks for the comment KC! We hope to post the outcome to this in the next couple weeks – so check back!
Well, here I am 15 months later (my bad) to finally put a period on this post. You may remember that we were indeed hired by Dave and Joan to design their kitchen. Once we were able to finally get past the Fourth of July Holiday and find some time to meet, we spent a good hour and a half discussing the kitchen project as well as a host of other things that they would like to change in the house. This list included a complete revamping of the master suite, changing the Jack & Jill bath between the kids rooms, relocating the laundry from the basement to the second (bedroom) floor, adding a deck, redesigning the layout of the basement, etc., etc., etc.
Well at the conclusion of this meeting, I innocently (honestly) suggested they might want to consider putting the house up for sale and finding a house that might suite their needs better. I explained that with all the work we’d just discussed we were probably looking at investing a couple hundred thousand dollars into a house that was probably only worth $450,000 – $500,000 to begin with. This would severely out price the neighborhood.
After a couple weeks, Joan called to tell me that they had done some investigating on the possibility of moving and that they were going to pursue that line of thinking for now. “What have I done?”
We stayed in contact and just before Christmas (2010) Dave and Joan moved into a new home. The new house met all their requirements for living space, with the exception of the deck/patio which they would like to discuss remodeling – after they get settled in and rebuild some finances.
Just a few weeks ago, Joan called me and it seems Dave just got a big promotion at work. The promotion is so big that they are being relocated back to Boston (home for both of them) at the end of September.
I wish them luck and the reality is that this attempt to explain a common situation, for both a homeowner and a contractor, was an excellent exercise. In fact, I’ll be looking for other common real life remodeling situations to explain in much the same way. Stay tuned!
Enjoy,
Paul