Value and Price- There is a Difference

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When shopping for a potential contractor do you base your decision on value or price? Many people will say “What’s the difference. They are the same thing”. Nothing could be further from the truth. Price is a numerical amount required for payment on a purchase, whereas Value is the importance, worth or usefulness of something.

Recently many home and property owners are feeling the pressure of rising costs of ownership, fuel costs, and taxes. What better time to take a good look at your expenses and see where you are getting the best value, and where you may be able to improve.

Most homeowners and property owners at some point or another will require the services of a professional- be it a General Contractor, Plumber, Electrician, etc. Homeowners will make multiple phone calls or emails to these professionals for services. I would predict that for every 5 calls made, they will only receive 2-3 calls in return. From those 2-3 contractors they will get price estimates for the work. Owners will usually then take the lowest ‘bid’ and choose that contractor to complete the work. Makes sense right? They have just made a decision based on one factor- price.

Everyone wants to make their money go as far as possible, so they choose the lowest bidder because that will take the smallest chunk out of their pocket. Here is where the trouble comes in. The contractor that you chose because of the lowest bid may not actually be able to pull off the scope of work, because they priced too low. Now you, as the homeowner, will be stuck with headaches such as constantly escalating job costs, a large and unexpected bill at the end of the job, or worse- the contractor won’t even be able to complete the job and will leave you with an unfinished project. At this point you may even have to hire another contractor to finish the mess the first one left you with. Occasionally the work is bad enough that nothing is salvageable- it must all be removed and started from the beginning.

Education is key when faced with the task of choosing a contractor. The mindset should always be on VALUE, and not just price. The price of the job must play a part, but there are many other parts at play as well. Take the time to evaluate potential contractors by asking for references and photos of past projects. Have a look at the detail, and finish work- are you going to get your best ‘bang for your buck’? Does the contractor specialize in this type of work, or do they claim to ‘do it all’? When you make attempts to contact the contractor do they get back to you in a reasonable timeframe (or at all)? Choosing a contractor based solely on price is a great way to find out who NOT to hire in the industry.

That doesn’t mean the lowest bid is always the worst contractor. They could be the best and have the lowest price, or they could be the worst and have the highest price. The main concept to keep in mind is DO NOT associate the price of a job with the quality of the contractor- the two are simply unrelated. Keep an open mind while considering ALL factors involved in the decision- not just price. Some factors to include in your decision making process should be:

  • Attitude/ personality of the contractor/ company.
  • Expertise in the area that you require.
  • Returning phone calls and emails.
  • Providing references, past customers, testimonials and pictures/ video of prior projects.
  • Quality of building materials/ sub-contractors.
  • Cleanliness of past projects. What will they do to keep your home clean?
  • A good contract or agreement for services.
  • Timelines and budgets.
  • Allowances. Will they cover what you think you will want to spend?
  • Insurance and Workers Compensation coverage.
  • What is included in the estimate? Are there items missing?
  • Warranty coverage- How long, and what is covered?

When shopping for a TV we don’t just go into the store and say “Give me your lowest priced 50 inch TV”. Smart consumers will take multiple factors into consideration like the brand name, features, picture quality, etc. before making the purchase. In these pressing economic times we all strive to stretch our dollars are far as possible. But keeping VALUE in mind when making money decisions is the best way forward- particularly in home renovation, repair and maintenance.

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