How to negotiate with contractors and sub-contractors
Negotiating with contractors and sub-contractors is a given if you have a budget to stick to and want to avoid material and labor costs to spiral out of control. Don’t hesitate to negotiate with contractors. In fact in their line of business, this is expected.
The negotiation process starts during the bidding when you get multiple bids from at least three contractors. Each time you go over the project with a prospective contractor, be sure to ask enough questions that would help you understand the reasons behind the costings of your project’s requirements. Contractors will also ask questions in return, so be clear with what you want done exactly. When you meet with contractors, let them know of what other contractors have said. This way, you make them aware that they have competition for the job, which will nudge them towards giving you the best price they can offer.
When negotiating with contractors, you emphasize how important price is to you. You can do this by asking for itemized bids. This way the scope of work is clear; as much as possible don’t leave things open for interpretation. Aside from the scope of work, also be clear about the start and finish dates.
One way of asking contractors to lower their price without saying it outright is to ask for their advice on how you can shave off a percentage of his bid because you want to stick to your budget. Normally, they would recommend changes such as a more affordable yet similar looking fixture or an alternative model of equipment. Ask as well if it will make a difference in the costs if you purchase materials directly. If you phrase your negotiation in a way where you are asking them for suggestions to save money, you are sending the message that you like their services and yet you want to stick to your budget at the same time.
Another approach when negotiating for a lower bid is to offer a more attractive payment term. For example, you can make a deposit for items that the contractor will need to purchase for your project. You can also propose to pay in full and in cash when they have successfully completed the job to your satisfaction, instead of for example, waiting for them to bill you and then paying them in check.
Negotiating with contractors and sub-contractors doesn’t mean that you should hire the ones that can give you the lowest bids. Your goal should be to get good quality work at a price you can afford. Remember as well that it will not be to your advantage to be too miserly such that the negotiation process becomes confrontational or antagonistic. While you want to end up with some savings, you also want both sides to have a positive experience wherein you save some money but the contractor makes some too. In the end, you want a contractor who is happy to do the job and do it well, instead of someone who will cut corners because they are unhappy with being forced to work on a low price.