Monday, March 15, 2010

What is the Real Cost of That Deal?

People have been cutting back on all sorts of items to get the most possible mileage out of a dollar. More and more often families are opting to forgo things like vacation travel and dining out in favor of spending their hard earned money on making their home and garden more comfortable and entertaining. As someone who gets to see the ins and outs of the home & garden improvement business we are often asked what to look for to get the best deal on home improvement projects.

My advice to those who would listen, regardless of the type of project, is always the same. Look for the best value. To get the best value it is important to understand the difference between PRICE and COST. Defined most simply, price is the amount of money you pay for something. Cost is everything you have to give up to obtain something. But wait! Aren’t they the same thing? No, they are not. Let me explain what I mean…

Price is the dollar amount you will pay for a product or service. For example, if you can buy a light bulb for 50 cents, then 50 cents is the light bulbs’ price. Simple! Now what about the COST of the light bulb? For that we need to consider how it will be used.

Suppose that the light that needs the new bulb is not the lamp next to your bed but is an exterior fixture which is twenty feet up the side of your house. You can pay the price of 50 cents for a bulb, but for the cost you also need to include the extra effort of setting up an extension ladder, climbing 20 feet up the side of the house, disassembling the fixture housing, changing the bulb, reassembling the housing, and then putting the ladder back in the garage. Wow! That was a lot of work. So while a 50 cent light bulb which needs to be replaced every few months may be a good value for the lamp next to the bed, the added cost of climbing up the side of the house every time it needs replacing means that the better value for the exterior light is in a higher priced bulb of better quality and with a longer life span.

The same concept applies to home improvement projects. Simply put, you need to look for value. A home improvement project is like the light 20 feet up the side of your house. Quality counts, because once the project is finished it is not easy, convenient, or inexpensive to redo it. So again, when getting ready to hire somebody to do a home or garden improvement project ask your self the difference between the price and the cost.

A good example of this is the story of a recent project which we did for a client. The client hired us to build a custom wood pergola next to their pool. At the same time, they hired another company to build a vinyl fence. They got a good price on the fence, but as my partner and I meticulously crafted their custom pergola so that it would have strength and beauty for many years to come, we witnessed some things which made us realize that the client did not get a good value in the fence.

Why not? The cost. The cost of getting the lowest price was that they had two men on their property who were, shall we say, of dubious character. At least one of the fence builders was already drunk when they would arrive to work, and both of them would periodically retreat to their truck, which was parked in front of the clients’ home, to smoke a certain plant which is sometimes used to treat glaucoma. In addition to witnessing a constant litany of loud and vulgar language, my partner and I also watched as the two men nearly came to blows one day over a minor disagreement.

As for the execution of the job itself? The two men constantly asked to borrow our tools because they didn’t have the correct ones to do their job. They set up their work station in the neighbors’ front yard and did not even clean up their mess upon completion, and best of all they filled their post holes for the fence with dry concrete mix and forgot to add any water before packing the holes with dirt!

The bottom line is that because the homeowner didn’t take cost into account and only considered the low price, the end result was a product of very low value. In fact, in just a couple of years the poorly constructed fence will likely have to be replaced or repaired and will end up costing the homeowner more money, time, and convenience then it would have even if the contractor with the most expensive estimate had been hired the first time around.

Is this a worst case scenario of cost far exceeding the price? Probably so. But it illustrates the point that when it comes to projects which are going to be a permanent fixture of your garden, yard, or home that quality and professionalism in a contractor leads to better long term value. Because, while it may be easy to replace the bargain light bulb in the lamp next to your bed the same can not be said of replacing that bargain priced deck, fence or kitchen.

So, to answer the question “How do I get a good deal on my home or garden project?” I say remember this. Because of the lengthy recession there are two kinds of businesses who are still available to do the job. Craftsmen, who get jobs because they are really good at what they do, and crafty men who get jobs by being the lowest bidder and cut enough corners to stay alive. The good news is that these days you can usually get the craftsman to do the job for a competitive price and without all of the intangible costs of the unscrupulous crafty man. Now that’s what I call a good deal!