Irrational Fiscal Exuberance

I received a call today from a potential new client. We chatted about his project, about the logistics of the project, and we even began to go through numbers, which I would not have brought up. But, it is always welcome to begin the money talk sooner than later. I worked backward from what his all inclusive budget figure was, categorizing each cost, and ending up with one sum for the construction (not a lot), which I felt was fairly close to what a labor estimate might be, given what he told me of his project. Of course, that is all subject to change when I see the home, but nonetheless, it's a good start, and I had just done a similar project.

 He told me that another kitchen design firm quoted him 3 times the amount, in terms of labor, that I estimated to be reasonable, with that firm also not having seen his home, and double the all inclusive budget overall. So, reasonable question, why the wide difference? Of course, I have no idea what all was included in the other "estimate".

iStock_000002186776XSmalla.jpgThis is one of the toughest and most tricky areas overall, the estimate. Essentially, we need to estimate something before it is designed. We need to evaluate the client's wants and needs and put a dollar figure to it. It's a little bit art, a little bit science, to get that number. But, with care and thought, it's doable.

Me, I don't want to be too low and build false hope. I also don't want to be too high and lose the job. I'd say I err on the higher side, but not too high, HATING the idea of having to reveal much larger numbers down the road and instead, often revealing a pleasant surprise of a lower cost instead of disappointment when the design work is finished. After we go through the whole process, who on earth wants to be told that the project is now out of their budget! That's a huge fear of mine, HUGE! I'd much rather lose the job than estimate too low.

But, you also don't want to mistakenly estimate too too high either.

Perhaps that more expensive shop feels as I do, that erring on the higher side is better than building false hope. From the information I have thus far, I think they went too far afield into irrational fiscal exuberance territory. I'll update this as I get more information. 

Tell me about your estimate story!

Posted on February 12, 2007 and filed under Kitchen Estimate.