There are a few basic categories of contractors that you can hire to work on your house. There are pluses and minuses to them all.
The challenge is sorting them out, because the way they present themselves to you is part of their marketing plan.
Here is an overview of the company types, followed by their business models and marketing styles, and how to tell them apart
The simplest form of contracting is where an individual provides the materials and does the work with his own hands. They are inexpensive, but may have limited construction expertise. A classic example is the local painter. They may do good work, have referrals that say so, and are competitively priced. If painting is what you want done, great. Other projects may require caution on your part.
Larger contractors fall into two groups, the sales driven company who hires out the work, and the supervising contractor with lots of experience whose business comes from referrals.
They both separate themselves from the one man operations in that they have licensing, insurance, certifications, and frequently have professional credentials from manufacturers
Marketing driven companies
The sales driven company has an internal marketing department and a large number of sales people all supervised by a sales manager.
They need two to four appointments or “leads” per day for every sales rep. The representative is assigned a lead like you, and comes to your home to do a presentation on whatever project you asked about and write a contract with you. These companies are expensive, so they have no incentive to let you shop around.
These companies are made up of people that may have been project managers or construction supervisors before they got big enough to need other trades and/or additional crews to get the projects completed. Their customers find them through referral or online reviews, and at home shows.
They have far fewer appointments, and charge more than individual operators, but substantially less than the marketing companies.
Why are the prices so different?
Different business models have inherently different overhead that gets paid by you, the customer.
Our one man show has very little overhead, which can be a good thing if they’re capable and honest. They don’t spend money on marketing, although you can usually find them in the newspaper classifieds under services.
Since they don’t have a history or infrastructure to point to, they generally sell on being the low price alternative. However, this means that they frequently look for the lowest priced materials, which may not be exactly what you want.
Contractors that are run by construction people charge a little more than the sole proprietors. They have specialized workers that perform different trades. For example: roofing crews, gutter crews, etc. Their overhead is controlled, but they have the background, with insurance and licensing in place.
Although they frequently have areas of specialization, they can handle a broad range of work professionally. Think kitchen and bath or roofing and siding.
You generally get a written proposal, and they might need to gather information on something a little out of the ordinary and get back to you. Things like imitation stone window egress wells that don’t get installed with any frequency.
Company management will actually come to the job to make sure it’s done right. Remember, they live off of referrals.
Marketing companies have the highest prices because they have, by far, the highest overhead.
The math in their business goes like this: number of leads (you) times 30% contract close ratio times average sale equals sales volume.
Since their prices are high, they want to talk you into signing the first day that they come to your home. If you don’t, they may lose the sale when you find out that the work can be much cheaper elsewhere.
Salesmen frequently only get one chance to visit you, so if they don’t sell you something, they don’t get paid their commission.
You can recognize these companies by their long presentations and a “special price” if you sign today.
Since they can’t sell much to people who have already been in the market, they hire telemarketers and canvassers to knock on your door so they’ll be the first ones to quote your project, and then offer you a “discount.”
The installation work is done by a completely different group of people. Since they operate at high volume, they can frequently attract good workers that want to work every day.
These are basic divisions within the remodeling industry. Once you know what you want and who you want to do it, it’s fairly simple.
You don’t need to have a big company with job sight supervision to tack up a loos piece of trim, but you do want them to be licensed and insured. If the project is large, like a new roof, you may feel comfortable using a company that is certified by the manufacturer.
Choose carefully, and take your time!
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Phone: 301 712-5228