ᐅ Is it still possible to negotiate the price with the general contractor?
Created on: 27 Aug 2021 18:21
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Bauen2022
Hello,
we are now close to finalizing the construction contract with our general contractor (GC). We are considering whether we should still negotiate the price. It should be mentioned that compared to other GCs with similar specs, this GC already offered the lowest price. The GC is giving us a fixed price guarantee for 12 months. Given the current situation, should we finalize the offer as soon as possible, or have you still tried asking for a discount? How did you proceed if you wanted to negotiate the price? Thank you very much!
we are now close to finalizing the construction contract with our general contractor (GC). We are considering whether we should still negotiate the price. It should be mentioned that compared to other GCs with similar specs, this GC already offered the lowest price. The GC is giving us a fixed price guarantee for 12 months. Given the current situation, should we finalize the offer as soon as possible, or have you still tried asking for a discount? How did you proceed if you wanted to negotiate the price? Thank you very much!
hampshire schrieb:
It’s hardly possible to give a crash course on successful negotiation in a forum. Of course, two parties can move closer together during a price negotiation. That goes well beyond simply asking for or demanding a discount. Since you obviously lack experience, the recommendation from @hanse987 to ask for upgrades or add-ons is probably your best option to gain additional value.
To explain: a discount directly reduces profit by 100%. An upgrade or add-on has a retail value for the customer and a production cost for the provider. If the builder gives you an upgrade worth €1000, it doesn't reduce their profit by that full amount, only by their production costs. If you have some basic knowledge on this topic, you can especially benefit from upgrades or add-ons that usually yield the builder a high profit margin – these are relatively inexpensive for them to include, and you get a good return. This creates a win-win situation. A simple question: what would you recommend in this area? Do you have any concrete examples of what one can reasonably try to get “on top”?
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hampshire28 Aug 2021 11:57jonhebbe schrieb:
Just a really basic question: but what would you recommend in this area?That’s not a basic question at all. And, of course, it really depends on the individual case. For most companies, the pricing strategy is such that basic products have a relatively low profit margin. The margin usually increases with premium options. Keeping this in mind, you can consider whether it’s worth upgrading the burglary protection by one class, or the flooring (as long as the installation process doesn’t change, for example due to very large tile formats), or the bathroom fixtures, or adding a few more power outlets (each located at or near the originally planned spots), or investing in a nicer staircase – these are fairly straightforward considerations with a high likelihood of being worthwhile. Of course, this only makes sense if the upgrade is valuable to you personally. Once these upgrades introduce additional complexity to logistics (for example, changing manufacturers as part of the upgrade), they become costly for the builder because it disrupts the workflow.