Updated: Dec 29, 2019
At Harris Home Improvement, we believe that Honesty, Integrity and Transparency should be a given. So, we incorporate these principles into every aspect of our business.
First of all, and most importantly is pricing. We believe that if a Contractor is unwilling to disclose to their customers how and why they price things the way do, then they are probably doing something shady.
So, I will prove to you, here and now, that we operate in total Honesty, Integrity and Transparency by revealing to you exactly how and why we price our work the way we do.
It's been a few years since I took over this business from my father, and I used to do the same thing that most other Contractors do, which is compete for the lowest price. As a result of this, I learned real quickly that when I compete for the lowest price, I have to do one of two things:
(1) I either have to shoot myself in the foot and spend more time and gather more materials to get the job done properly, and therefore take a hit to my profit, and sometimes not even make a profit (I once built a deck for Free because of this). This, of course, was the decision I always made, but not the decision most other Contractors would make. Most other Contractors would choose the second choice.
(2) The other option is to shoot the customer in the foot, and cut corners on the labor and material in order to get the job done without losing too much money. Unfortunately, this usually means the customer is left with shoddy workmanship and a lot of headaches. Anyone operating this way is not operating under the principles of Honesty, Integrity and Transparency.
So, after my first couple years in business, I slowly began to figure out how to calculate the Fair Market Value for the kind of work we do. And believe it or not, there are contractors out there who charge sometimes more than twice as much as the Fair Market Value, but they are very few and far between.
Most Contractors that provide as much value as we do Charge twice as much as we do. I just don’t have the heart for that because I don’t believe that I should be making an astronomical profit margin. In fact, I only want a 10% Net Profit Margin. I believe that is the most fair, no matter how much value is being provided.
First of all, here is how most Contractors Charge: They take the cost of Labor and Materials and add 20 to 30%. When they go out of business, they always wonder why. They aren’t paying themselves or their business enough to stay afloat. So, now they have to cut corners and skimp on materials to get the job done. And if you think they are caring about your property while they are doing that, think again.
Then, you have what other Contractors like me do, who provide an incredible amount of value to their Customers. They take the price of the guys above and double, triple or quadruple it. They don’t get as much business, but they make up for it in price. Unfortunately, this leaves the customer overpaid and undervalued. Not quite my cup of tea.
On the other hand, what we do is figure our cost for the Labor and Materials. Then we double the Labor. Then we add our Gross Profit Margin. With this, I can pay Master Tradesmen what they are truly worth, so they are much happier with the work they do, which leads to a better result. They will slow down and take their time to make sure they are not only producing Excellent Results, but also respecting your property the whole way through. I can afford extra prep materials to keep your home protected, I can afford camera’s to keep an eye my employee’s inside your home. I can give myself a decent Salary, and look forward to a decent year end profit. Compare that to others like me who charge twice as much as me, if not more!
So, now you know what the Fair Market Value actually is. Remember, most Contractors are competing for the lowest price, and very few Contractors charge more than Fair Market Value. So, it's important to remember that often times, the Fair Contractor that is actually operating out of Honesty, Integrity and Transparency, will usually be the most expensive Contractor you get an estimate from. Unless, of course, you are looking specifically for an expensive Contractor. In which case, we will likely be the least expensive.