Builders Quotes: Why do builders price so differently?

So you’ve received an industry standard price through B4U Build, taken your brief to a designer then sent it off to various builders to price. But when the quotes come back, one builder is 10% higher and another builder is 10% lower. Why?

This is not an uncommon scenario. Unfortunately, there is no industry standard when it comes to builder’s quotes and when builders put together their pricing they consider a few different factors.

1. The builder’s skills and experience plays a part

The builder’s experience, for one example, could play a part in the pricing. More experienced builders can afford to price projects higher because they are able to prove the quality of work and they are likely to be more in demand because of this.

These builders may also be booked out in advance and feel they can afford to quote at a higher price to capitalise on the demand for their service.

Not-so-experienced builders, on the other hand, may have the mindset that because they have no projects under their belt to show their experience, they should price the project low just to win the work. So they price low even though they may not be making any money in the process.

This can be a risky practice. While it may mean the builder does win projects and get a few builds under their belt, if they continue to quote low, it undermines their business and may even put them in financial stress.

2. The quoting process is different between builders

The way builders price each project may also be completely different. They may receive different pricing from each external trade and supplier and they may calculate their profit margins differently.

Another factor is likely to involve the processes that each builder has in place within his business. For example, one builder may quote for only one coat of paint while another builder quotes to use premium paint and apply two coats. They may have different staffing levels and different overheads that they factor in. All of these details play a part in each and every quote.

This is why it’s important to get a baseline figure for your home build so you know what pricing is fair and equitable. It’s also critically important to make sure you are comparing each quote based on what is required for your build.

Why is underquoting a bad thing?

Receiving a low quote from a builder for your home build when all other quotes have come back at a higher price is something to be concerned about for various reasons:

• If a builder quotes your project low, they may not be making enough profit to sustain their business. This means they could potentially go bust at any time during your build. This would be the worst-case scenario. While you may be covered for any losses under the homeowner warranty in your state, this can take months or even years to finalise. Your build will sit in limbo for this length of time. It may also be more difficult to find another builder to take over the remainder of the build.
• If the builder quotes low, they may be looking to make up the difference in variations. This is an underhanded practice that is unfortunately common with some builders within the industry. The builder quotes low to win the work, but then ultimately ends up costing you more, because they continue to ask for more money throughout the project for work that is required, but was not included in the original quote.

It is highly beneficial that your builder remains financially solvent throughout your build and well beyond to ensure they are still around to maintain any warranties. But at the same time, you want to make sure you are not overpaying to build your home.

This is where our pricing software comes into play. We use industry-standard pricing sourced from builders Australia-wide so you know whether a builder is pricing fairly.

The B4U Build pricing software has been created specifically to provide you with baseline pricing so you are able to determine if a builder is pricing fairly, underquoting or grossly overquoting. Our software also provides detailed checklists that you can use to make sure each and every quote you are receiving is comparable and inclusive of all the information you need to know.

And remember, if the quotes are missing any information or you haven’t received enough information to make an informed decision, go back to the builder and ask for more information. The best time to be informed is before you sign the contract, not after.