Treat new customers, repeat customers, and friends equally well… charge fair prices… and strive to find ways to provide more finished value to each and every customer than we receive in compensation.
We give a free consult and a rough estimate. If you want to proceed, we will write up a contract for the work to be performed which is committed by a signature and a deposit that covers pre-construction things like permits. The contract will set up a progress payment schedule (defined by construction completion stages and based on the estimate). Then in place of the last estimated progress payment, the final cost (total job cost) is determined not by the rough estimate but by an itemized accounting of the actual materials, labor, and overhead required to complete the job (Minus any progress payments already made). Annually, our material multiplier, labor prices, and overhead are are updated to current conditions and published on our website.
2017 Published Pricing Formula:
Final Job Cost = 20% Overhead on the following:
Materials + Labor Costs by hour + (shop rate when applicable) + (Subcontractor Costs + 0% when applicable) + (design fees when applicable) + (permit fees at jurisdictional rate when applicable)
- All progress payments received are subtracted from the amount owed when final itemized bill is presented.
- Design fees are 7% of rough estimate(if applicable) + blueprinting fees 3% of rough estimate (if applicable)
- For change orders that increase costs, the difference due at time of change order signing.
Current labor prices (derived but rounded down from RemodelMax as described below): Laborer $25, HVAC/mechanical $75, Truck Driver $30, Tile/Marble $40, Concrete Worker/Demolition $40, Carpenter $50, Painter/Decorator $40, Masonry/Waterproofer $50. Equipment Operator/Manual Digger $40, Roofer/Sider/Gutter/Window/Door $45, Electrician $75, Plumber $75.
And 2017 labor prices for things not specifically in RemodelMax: Wood/Stone/Metal/finishing shop billing rate $20 + laborer/finisher $25 or cabinetmaker $40 or stonecarver $50, Asbestos Abatement Supervisor $60, Computer Aided Design $40 (though generally not billed hourly).
Why don’t you just estimate and bill at a fixed cost?
We can, but you’d end up paying more. Our pricing and billing model is derived from several factors:
- We want to fairly charge for our services.
- We want to work with low overhead… not spending too much time estimating and then subsequently passing those costs on to customers as overhead.
- We want to insulate our customers, ourselves, and subcontractors and suppliers from the lack of protections in the state lien system that was bankrupted during the housing crisis. A short and accurate description of the condition of the state lien system is here: http://hilgerhammondconstructionlawblog.com/category/homeowner-construction-lien-recovery-fund/
- We want to have the money in hand to pay for subcontractors/suppliers before they arrive on site to be able to easily avoid lien issues, and to get full releases from them when they are paid for the work they completed.
- We don’t want to use company money to fund customer projects.
- We want the customer to have complete transparency so that as our relationship on that project comes to a close, the customer knows exactly how every dollar was spent and why.
- We want a billing system in place for our customers be fair through the whole normal process, but be easy to settle fairly in the event of a worst case scenario dispute. That means the customer must have the freedom to sever ties at any point in a project for any reason and be completely cashed out in a fair manner that is no different from any completed project.
- We want to bill a new customer the same as a repeat customer and the same as a close friend. In other words, we don’t want a system of over-billing that allows room for discounts. (Our goal is fair and honest pricing for every single job)
Initially the pricing model we currently use was set up as way to bill friends and give them great value for their money while still remaining profitable. We then decided to extended that pricing strategy and transparency to all customers because of all of the benefits listed above.
“At the beginning of the job, the customer has an estimate. We draw up a detailed contract and a payment schedule based on that estimate and construction progress stages, and the customer pays these stages to allow me to get full lien releases from all suppliers and subcontractors, protecting the customer. At the end of the job, on the last payment, the customer has a clear and detailed bill with an itemized list of all labor, material, and overhead costs, and we simply square up the difference between actual costs incurred vs estimated payments already received. It is the fairest, most flexible and transparent pricing system of any contractor we know of.”
-Essen Davis, G.M., Level Up Contracting LLC
How the Sausage is Made (A More Detailed Overview):
A rough estimate is provided. If you’d like to proceed, we draw up a contract…
Some projects have permitting fees. These are billed at the local jurisdictional rate.
Some projects have design/build costs. These are billed at 7% of the rough estimate for 3D design work and 3% for blueprints (only when needed and are additional to the 7% design work) These costs are less expensive than outsourcing them (for example in cases where a city needs blueprints, it saves money for us to draw them up instead of going to an architect or outsourced cabinet shop. When this is needed, it usually is done first as a separate contract.
Material costs are passed on exactly with no additional fees.
Shop Rate is an hourly fee charged when applicable to cover the tooling, sharpening, consumables, utilities of having a fully tooled space to make custom create wood and stone work instead of subbing it out (which generally costs much more than the shop rate does)
Labor costs are set annually and derived from by the lowest average for each specialty from RemodelMAX published labor rates for the year and region. If you are curious to see it or about other regions you can see it right here. To the nearest hour, each hour of each person working under us is billed at the lowest skill level needed to perform that work by that person. (Licensed/insured subcontractors are used when appropriate and their costs are passed through directly and not billed/tracked as labor hours.)
- We use the lowest pricing between the nearest 3 cities in the current edition of RemodelMAX (Detroit, Ann Arbor, and Livonia) which this year is Ann Arbor and then round that down to not deal with impossible to remember numbers. You get excellent craftsmanship but are only charged lower than average local prices. There are a few further breakdown labor rates that are not on that remodelmax list, but theses are all listed above.
- (It should probably be noted, that these are not prices that I or the people working on your project actually take home, but the prices that include all costs associated for that hour of labor for that employee including taxes, medicare, insurance, unemployment insurance, workers comp, etc. Those rates are approximately the rates that it costs the company to cover the hourly wage and all the overhead for an employee to perform that job function.)
Subcontractor costs are passed on exactly with no additional fees. In some cases if deemed reasonable/feasible, we will supply the materials for the subs to maintain our system of transparency for you if a subcontractor does not provide such, in cases where we don’t, and material costs are significant, we will request the subcontractor supplies an itemized list of all material costs for your project.
And finally we add 20% company overhead to the sum of all those costs to cover business expenses like insurance, fuel, vehicles, tools, advertising, generally for “keeping the shingle out front and the lights on”.
If you project is set up (most are) for scheduled estimated progress payments, the final bill reflects those monies already paid.
We take several forms of payment:
cash, Visa, Mastercard, personal checks (under $1000)
and cash or certified bank checks (over $1000)