Why Are Contractor Quotes Different?

Last Updated February 8, 2019

Why Would Contractor Quotes Be Different?

You are looking for a furnace system, a fireplace, a water heater, or a heat pump installed. You have received 3 quotes from contractors that you have heard or read about and the prices are different, sometimes widely different. Why?

You, the customer, are most interested in getting the highest level of service or product for the least amount of money.

Everyone wants that. In my ideal world, I could get all my projects done and items bought and it would cost me nothing. A nice fairy tale but the world always wants something in return. Back to reality.

One of the hardest challenges that a contractor faces is pricing his goods and services to the public. The contractor’s price includes many smaller prices and choices all wrapped up inside it. And you, the customer should be aware of these costs and choices that the contractor faces so that you can get the best deal or “Bang for the Buck”.

Direct and Indirect Cost Considerations

The direct costs:

The “cost” of the product and material to do the job.
The cost of labour to do the job.

The indirect costs:

The cost of the vehicle.
– Is it a new, or old vehicle? Does it have a payment attached? Insurance, gas, wear and tear. Do I need to send one or two trucks?
The cost of the company shop.
– Is it a rented space or is it out of the contractors home? In either case, there is heat, water, hydro, taxes, and insurance.
The office staff.
– How many are there? And what do they do?
Additional Payroll costs such as benefits, stat holidays, new labour law costs, CPP, EI and the rest.
Certification costs.
– These are costs associated with being a legal and accredited contractor in their field. In our field, they include Contractor Registration with the Technical Standards and Safety Authority, TSSA, AND certification renewal for each technician, Registration with the Ontario College of Trades, training costs.

And Profit? If there is any, it needs to pay the owner’s bills or buy another cottage, depending on the contractor.

Also, the cost of the product and material, the furnace, venting, and duct, gas piping, condensate lines, pump, glue, etc. can vary widely from contractor to contractor.

Are You Comparing Similar Furnaces?

What brand and type of furnace is being quoted? Apples to apples? Is it a 2 stage with ECM motor or a single stage with PSC motor? The difference in contractor cost could be $1000 or more, and most customers don’t know the difference.

Some brands of furnaces are well known such as Carrier, Trane, or Lennox. Does that make them better? More reliable? Not necessarily. And the fact that you know about them means that they are priced higher And that you are more likely to buy one BECAUSE you have heard of them.

How Large is the Contractor’s Business?

Is the contractor large enough to get multi-unit discounts? The suppliers are more likely to discount to the contractor if they buy 200 furnaces a year then if they buy 20.

The labour costs are how long it takes to do a quality versus a poor job. How many men? What is the skill level of the guys? And what are they getting paid? A good, knowledgeable, fast installer will do a fantastic job but they must be paid well or off to the next company they go. This may mean a higher customer price.

Most problems with furnace performance can be traced back to a poor installation.

Is the Quoted Price Too High or Too Low?

That depends on a variety of factors. Is the company driving around in new trucks? Does the owner live in a mansion?

When getting quotes there are many factors to consider on choosing the right contractor to go with. Sometimes it’s best just to use the company that your friend’s trust. Who knows, your group may get a discount on maintenance.