Why do things cost more when I hire a contractor?

Today on Ask Dale, we’re answering a real consumer question that Dale gets asked pretty consistently!

The question on so many people’s minds? How do you justify the profit margin between the retail cost of materials or equipment versus the amount a company charges a consumer for it?

Dale gets this question often, particularly when a customer hires a tradesman, like a plumber or an electrician. The customer sees the itemized bill and then searches online for the cost of the equipment, like a water heater. 

At a big box store, they may sell a water heater for hundreds of dollars less than what that pro is telling you for that exact same piece of equipment! But when you pay a pro to replace that old water heater or other items, you’re paying for much more than just the equipment. 

The price charged takes into account the ready availability of the model or size you need to be delivered directly to your door. You’re also paying for the contractor to have the proper tools and know-how to install the water heater quickly, safely, and efficiently.  

Once the new water heater is in, the professional you hired is responsible for hauling away and disposing of the old unit responsibly. That, too, is covered under a portion of your payment. 

Another value that you get from hiring a pro is that they have liability insurance that protects you and your property if anything goes wrong. And most professionals will offer a labor and parts warranty.

Plus, you’re paying for reassurance. This person is working in your home! That’s why you need to know that they’re trained, background-checked, and qualified to do this work. That training takes time and money, and the skillset developed deserves reasonable compensation. 

Look, the bottom line is that nobody wants to feel like they’re paying more for something than what it’s worth. But what’s worth more than your peace of mind? 

However, to make sure you’re getting a good deal, Dale always recommends you get three estimates before you settle on a contractor for a job. And make sure the companies know they’re competing for your business! In Dale’s experience, it will make a difference.