Why Do General Contractors Cost So Much?
January 11th, 2023 | 6 min read
Are you thinking about using a general contractor to remodel your home? You have an idea of your budget. You want to get the best value for your dollar. And you’ve likely begun reaching out to several contractors to get some quotes for your project.
If the quotes you’re getting are coming back higher than expected, you’re probably feeling a bit cautious, and wondering why it costs so much. Your project seems straightforward. Why can’t it be built for less?
This is a common frustration among home remodelers like yourself who are looking at a general contractor for the first time. So many factors affect a project’s cost that it’s tough to estimate without reference points to base your budget on.
Your concerns about higher-than-expected prices from general contractors are something we understand. As one of Mid-Michigan’s premier general contractor companies, we write quotes for projects like yours every day.
Our goal is to not only design and build the remodel you want, but also to answer your questions about the details of the home remodeling process. You deserve a five-star experience as well as a beautiful finished project!
In this article, you will gain some clarity about general contractor prices. You will learn what general contractors are, why they cost so much, and what factors go into their quotes. You’ll also learn about other available options if the general contractor’s prices are simply too far outside your budget:
What is a general contractor?
A general contractor is a company responsible for overseeing and managing construction projects. Physical work is typically done by subcontractors who are hired and coordinated by the general contractor on your behalf.
Even when not on-site, your day-to-day communication will be with your general contractor. Subcontractors, known as trade partners in the Custom Built process, will also communicate directly with the general contractor while they are working on your project.
A good general contractor is licensed and insured, and maintains responsibility for coordinating subcontractor work, communicating with homeowners and subcontractors, and making sure everything is done on time with high standards.
Not all general contractors are equal. General contractors may vary greatly in experience and quality. Some work on their own, without support staff. In this case, communication may be delayed, and you may find yourself communicating with subcontractors directly, which will lead to miscommunication, mistakes, and overall frustration.
Whether your project is as large as an entirely new building or as small as updating a half bathroom, you’ll want to ask a general contractor about their level of experience and expertise before you hire one. This will help ensure you have the positive experience you deserve.
Why do contractors charge so much?
Back to those general contractor quotes for your project that are coming in higher than you expected. If you’re asking yourself why it costs so much, you’re not alone.
As with most businesses in the service industry, the saying, “You get what you pay for,” also holds true in the remodeling industry. This principle applies to a general contractor just as much as to a hotel, restaurant, or interior designer.
A good general contractor’s value includes high-level service that is much more likely to give you a positive experience. Good home improvement services involve a lot of investment in hidden details. It is often more expensive because it requires high levels of other resources, like time and expertise as well as money.
Pricing factors that determine a general contractor’s quote
The prices that general contractors charge vary based on a variety of factors. Some of these are straightforward while others are more nuanced. However, considering all of them is important so that you understand what you are getting for a quote that appears high on its surface.
Factors affecting your quote include:
The general contractor’s experience managing successful home renovation projects
Your quote not only includes the completion of your home remodel, but also the general contractor’s experience in successfully managing projects like yours in the past.
With expertise comes added costs. If you want a project that is communicated and managed well, as well as completed in a timely manner, you are likely going to pay more, because these things reflect experience.
If you have a friend or family member who has had a bad experience with a general contractor, they may have chosen an inexperienced general contractor. Poor communication and poor management are hallmarks of cheap contracting. Remember, a higher price that reflects more experience isn’t a bad thing.
The general contractor’s relationship with subcontractors
General contractors use the services of subcontractors to get the work done. Oftentimes, both parties will develop a mutually beneficial and trustworthy relationship where the subcontractor becomes the go-to person a general contractor hires.
A good subcontractor will not only avoid mistakes but also show up on time and treat clients and their homes with respect. A lot of work goes into a general contractor’s relationship with their subcontractors. This ultimately makes their job of managing your project much easier.
Included in your quote is the cost of relationship development. In the construction industry, a solid relationship established and maintained between a general contractor and good subcontractors will directly and positively affect your home modeling experience.
The general contractor’s knowledge of the building code
For your project to begin construction, building permits must be obtained and followed. The general contractor is the person responsible for submitting your construction plans to the building department to obtain building permits on your behalf.
Detailed construction plans must meet current building codes when they are submitted to the building department or they will be rejected. This can result in frustrating delays and further costs.
Following building codes, writing construction plans, and following detailed plans require extensive knowledge of building codes and permits. This expertise and commitment to excellence will increase your quote’s price.
In-house services the general contractor offers
As discussed earlier, a lot of the work is performed by subcontractors. This does not mean that everything has to be done by subcontractors. Often, good general contractors have in-house staff who do some of the work themselves.
At Custom Built Design and Remodeling, we have in-house designers and carpenters for those aspects of your project. Other services are contracted out to our trade partners such as electricians, plumbers, and HVAC specialists.
Keeping people on staff is a great way to build consistently high-quality service, and is a big benefit of choosing a good general contractor. However, it also means more overhead costs, and naturally, these can increase the amount of your quote - especially during larger projects.
The time it takes to design your project
The time it takes to design a remodel for a small half-bathroom is less than it takes to design a large intricate kitchen. The longer it takes to design your remodel, the more you can expect to pay.
A general contractor will spend time with you and potentially an outside designer if they do not offer a design service in-house. More time spent on designing your project will be reflected in a higher quote.
The time it takes to build your home remodel
The longer your project takes to build, the longer you are going to need the general contractor’s services, which will increase the cost.
Several factors can affect construction time, including the size and scope of the project, its complexity, and the number of different subcontractors needed.
Remodeling options if general contractors are too expensive
You may now understand why your quotes have come back higher than you expected, but still be worried that they’re too far out of your budget range. There are other options available to you.
You can still achieve your dream home remodeling project without hiring a general contractor. You can do it yourself. Or you can act as your own general contractor.
DIY
While you may be hesitant to do everything yourself, this is a viable option that will save you money if you are willing to put the time and effort into learning and building your project.
There are lots of resources available to show you how you can design and build your remodeling project by yourself. Whether you are redoing your entire kitchen, updating a living room, or giving your bathroom a facelift, you can DIY to save costs.
Acting as your own general contractor
If you are uncomfortable with building your own project, you have the option to act as your own general contractor.
With this option, you reach out to independent subcontractors such as electricians, plumbers, cabinet and carpet installers, etc, to do your work for you. You can even have an independent architect or interior designer help you design your project and develop the construction plans.
This option definitely has a learning curve associated with it. However, if you have time and effort to put in, learning how to be your own general contractor can save a lot of the cost of remodeling your home.
Next steps to plan your home remodeling project
While you may still be concerned that general contractors are out of your comfortable budget range, you learned about many of the factors that go into the higher cost of hiring one.
You also now understand the value and benefits of having a general contractor manage your project, and a little about what makes a good one. You’ve also learned what other, less expensive options are available to you. Either way, you now know how to get the results you are looking for.
As a home remodeling company in the Mid-Michigan area, we understand in great detail what goes into pricing a project like yours.
If you’ve weighed the pros and cons and have decided that hiring a general contractor is right for you, we’d love to work with you on your dream project. Book an appointment with our project development advisors to see if Custom Built is the right fit for you.
You may be interested in more information on the Top 3 Remodeling Options Available.
You may also want to learn how much the average project costs. Consider checking out the following blogs:
- What is the Average Cost of a Deck?
- How Much Does a Kitchen Remodel Cost?
- How Much Does a Bathroom Remodel Cost?
Michael brings over 2 decades of building and remodeling experience to his position as the Owner and Visionary of Custom Built. Michael’s passion to make an impact on the home building industry has led him to serve for over ten years at the local and state Home Builders Association, culminating as President of the HBA of Michigan in 2020.
