Process Guides / By Carol Wang / September 5, 2017
Labor-Only vs. All-Inclusive Bids: A Primer
Compare breakdowns, time management needs, and the truth about material costs to determine which kind of home renovation bid is best for you
Here on the Sweeten blog, we’ve previously discussed leveling bids, preparing for bids, and site visits. Soliciting and comparing bids is one of the first steps of a home renovation project, and it can be daunting to figure out the best way to go about it. At this point, one of your major considerations is likely the budget: how much do you need to spend to get the results you want, and where does the money go? Many homeowners (myself included!) have been tempted to go with labor-only bids from contractors in an attempt to lower costs. Let’s take a look at the pros and cons of labor-only bids versus all-inclusive bids.
Understanding the difference
In a labor-only bid, contractors will identify the labor costs associated with various parts of your project. For example, their bids will include line items such as demolition and installation related to various aspects of your project. We’ve included a sample labor-only bid for an apartment kitchen update in a condo building in the box below. This real-life example is of a 125-square-foot kitchen in Brooklyn, where the Sweeten homeowner was changing out many of the finishes in her kitchen but retaining the existing appliances since they were just a couple years old. She also kept the lower cabinets to create a dual-tone look.
Let’s take a look now at an all-inclusive bid for the same kitchen:
Which is right for you?
The bids are very different, but keep in mind the labor-only bid does not include the cost of materials, which you’d still need to account for separately. Let’s break down the difference between the two scenarios.
The truth about material costs
The biggest differences in price come from the cabinets and countertops (the materials themselves): the new cabinetry comes out to $5,900 and the quartz countertops $5,400. (Since the cabinetry installation for custom work is less labor intensive than assembling and installing modular cabinetry, the labor costs are actually lower on the all-inclusive bid. And because countertop suppliers usually throw in installation as part of the quoted cost, we don’t account for it separately in the labor-only bid.) The question is whether you can find better prices than your contractor. General contractors have partnerships with suppliers and wholesalers that allow them to obtain materials and parts at lower prices, which they can pass onto you. While there will be a markup for their time and effort, the final number may come out fairly close to what you would find on your own.
Another note: If you plan to go with custom cabinets, they will cost more no matter whether you source them from an independent millworker or go through your contractor. Similarly, there are pricing variations on countertops, but they should generally be in the same range.
How much time do you have?
Aside from the comparison of the cost of materials, the other major consideration is time. Managing a home renovation can be as time intensive as a job, and labor-only contracts require even more from homeowners in terms of preparation, research, and project coordination than all-inclusive bids. This is because you, as the homeowner, are the de facto project manager, having only delegated part of the job to your contractor. You are still responsible for making decisions on materials, as well as sourcing and coordinating the delivery of all materials to the work site.
Depending on the size of the job, this can get very complicated. Some homeowners have shared that significant delays have resulted due to their own miscalculations or oversight about product delivery lead times. This is why some contractors strongly advise/request you let them handle the ordering and delivery logistics. While an all-inclusive bid does not guarantee that there will be no delays, it’s the contractor’s responsibility in that scenario to ensure that all materials arrive in time for each step in the process. As professionals, they are accustomed to all the steps and what needs to arrive when for the project to be completed on time.
So, while the total price of an all-inclusive bid may look overwhelming at first, it is important to understand what goes into it and assess whether it will save you an enormous amount of time, hassle, and frustration. Centralizing the responsibility with your contractor also makes the process more straightforward. Lastly, to make the decision simple, ask yourself these questions:
*Are you very organized?
*Do you have a lot of time to spend on this renovation project?
*Do you already have very specific ideas about where to source fixtures, tiles, and other materials? (E.g., you already have your eye on those Schoolhouse Electric pendants and have decided on a full IKEA kitchen suite.)
*Are you a designer or have industry connections?
*Is the bottom line the most important thing?
If you answered “yes” to all of these questions, you may be equipped to tackle a labor-only bid. If you answered “no” to any of them, however, an all-inclusive bid is your best bet for a smooth, turnkey home renovation experience.
What to find out more about what your general contractor will do for you? Check out our post General Contractor 101: How to Find One and What to Expect.
Sweeten handpicks the best general contractors to match each project’s location, budget, and scope, helping until project completion. Follow the blog for renovation ideas and inspiration and when you’re ready to renovate, start your renovation on Sweeten.