Everyone is price sensitive. We scour Amazon or Ebay to find the cheapest version of a product & feel great when we know we’ve found the cheapest price.
Although modern technology trains us to do this as a lifestyle habit, unfortunately, the same logic doesn’t always apply within the service/ building industry
On Amazon you are often searching for the exact same product & then searching for the cheapest price.
In the building industry, the quality of the product & service you receive may not be anything like what you have envisioned.
Beware of basing decisions on price alone. It would be a bit like searching for a mobile phone by price alone. Of course, you could get a bargain & pick one up for £50, but there is no point in trying to compare it with the latest IPhone.
A massive part of the build cost will be on materials & labour. On average we find this normally works out as a 40/40/20 split
- 40% on materials
- 40% on labour
- 20% overheads & profit
When basing a decision to select the cheapest quote, you need to bear in mind that the builder will still be looking to make a similar percentage on the profit. This means in some cases that the price they have for labour & materials is now less than the more expensive quote
£50k for extension
40% materials = £20k
40% labour= £20k
20% OHP= £10k
Quote 2 (cheapest quote)
£40k for extension
40% materials = £16k
40% labour = £16k
20% OHP = £8k
Although you may be saving £10k on the cheapest quote which is a huge saving, you need to bear in mind that behind the scenes the building company cannot be spending the same amount on materials. Potentially the £4k saving they need to find will be found by using cheaper/ inferior building products.
The same can be said of the labour. A skilled tradesman does not come cheap, so a £4k saving the company needs to find may come from less skilled labour.
This is not always the case by any means. Sometimes you can find a great builder who is prepared to earn less OHP & has a highly skilled labour force that is cheap. But this is very rare.