What You Need to About Fixed Price Quotes

4 Dec

You might have heard the terms “price estimate” and “fixed price quote” being thrown around as you do your research about custom home builders and renovation projects. It is important to understand the difference between the two as they are not the same.

Differences Between “Fixed Price Quote” & “Price Estimate”

A price estimate refers to a ballpark approximation of the price that you’ll pay for renovating or building your house. This is usually based on incomplete or uncertain information and is simply an educated guess.

A price estimate won’t include quotes from subcontractors, and it won’t give you the exact reflection of what you will pay in total.

The numbers someone will give you are usually based on the project’s difficulty, its size, past projects which are similar to what you want to build, and the quality of the builder’s services.

A Fixed Price Quote provides comprehensive information about how much you will pay to build your dream home and it includes the full scope of work needed without any variations. A fixed price quote is more detailed and more accurate. It comes with a documented scope of work, a breakdown of all the expenses, and the final total.  

The Problem…

The problem you need to be wary of is that some builders will provide free price estimates for clients and disguise them as fixed-price quotations. 

They’ll give you an estimated amount of all the expenses, and add some provisional sums and PC items, as quickly as possible, so they can immediately sign a building contract with you. However, without a detailed quote, you are wide open to be hit up with a lot of costly variations as your build progresses and this could result in nasty budget blow-outs.

This is why as professional builders, we recommend a paid fixed-price quote which provides a detailed and accurate quote to align with your budget.

Why Pay For a Fixed Price Quote?

When it comes to building your dream home, are you willing to take the risk of unexpected expenses and a budget blowout? Are you willing to risk your budget and have the possibility that it might be completely unaffordable when it’s too late to go back?

If you pay for a fixed price quote, it means that you’re acquiring a professional service.

With this, you allow the builder to spend enough time and go through your project carefully.

They can collect all the documents and information they need to provide you with an accurate price, that’s custom and relevant to your build. Not a guess based on someone else’s build they did in the past.

Yes, the price you see on the fixed price quote looks more expensive than the estimated one, but you might end up paying the same cost when you choose to acquire a free estimate. 

When you go for a free estimate (disguised as a fixed price quote), chances are, your project costs will have lots of variations and you’ll end up paying what it was always going to cost anyway, resulting in a broken relationship with your builder.

To make it even worse, the builder could go bankrupt because they didn’t see that they’re not making any money, leading to an abandoned project— which could be your dream house if you went with a free price estimate.

Not convinced yet? Take a look at the benefits of a legit fixed-price quotation.

Benefits of a Paid Fixed-price Quote

Minimal provisional sums and PC items

With a fixed price quote, you can set aside the exact budget needed for your project to be completed. You won’t be surprised by the unexpected amounts during the building process which results in a hassle-free and much smoother build.

Just imagine being bombarded with unexpected costs! No doubt that’s going to stress anyone out which isn’t what you want when you’re engaged in a lengthy process like building a home.

You’ll have specific expectations

What you see is what you get if you pay for a fixed-price quote. 

You’ll know exactly what’s permissible for your project and what’s not. With this, your expectations are set and you’ll avoid disappointments. Statistics have proven that builders who charge for a quote result in you as the client having a much greater chance of actually having your project built.

Some Reminders Before Getting Your Fixed Price Quote

Now, that you’ve got enough reasons to get a paid fixed-price quote that shouldn’t mean that you’ll automatically accept any custom home builder that will come to you and offer a quote. 

You’ve worked hard for that money and you want your dream home or project to be a success, so please be very careful in choosing the builder you’ll entrust your project with.

Summary

A ball park estimate is an excellent approach if you are just looking to see if your project is feasible. However, if you are ready to proceed with your build, it is essential that you get a comprehensive, detailed Fixed Price Quote from a reputable local builder.

Contact CKS Projects today and let’s start a conversation about your home.