Cheap vs. Strategic: Where to Spend and Save | #43

Return on Design

This episode of Return on Design explores the critical difference between being cheap versus strategic when making design and renovation dec

Key takeaways

Being cheap is driven by avoiding expenses; being strategic involves evaluating the outcome of not spending money.
Low bids often come with compromised quality or hidden costs due to vague specifications.

Main topics

Cheap vs. strategic mindset in renovation decisions
The hidden costs of low bids and poor craftsmanship

Notable quotes

A smart investor is not asking, how much do I have to spend? The smart investor is actually looking at, what's the return that I'm going to get out of what I do actually have to spend here?

Conclusion

The episode concludes by urging listeners to shift from a cheap mindset to a strategic one by focusing

Transcript preview

Speaker 1 (0:00) So I just want to kick this off directly to our audience, to our listeners, and ask you, where do you fall? Would you consider yourself to be cheap? Or would you consider yourself to be strategic? If you're not sure, here's one sure way to help you kind of navigate the unknown. If you're constantly looking through the lens of like, do I need to spend that money? You're probably going to fall more into that cheap category versus... If you are thinking more like, what is the outcome if I don't do this or I don't spend that money? You're probably thinking with a strategic mindset. Welcome to Return on Design, the podcast where beauty meets strategy and interiors become assets that perform. I'm your host, Rachel Niederhofer, designer, investor, and builder of high-impact spaces that deliver real results. Alongside my husband... I run both a design firm and a real estate investment company where I live at the intersection of creativity and ROI every day. Each week, I'll be unpacking what most people overlook, how strategic design decisions can grow your investment, elevate your lifestyle, and unlock the full potential of your property. You'll get real tools, proven strategies, and unfiltered conversations with industry experts who are doing it right. So if you're ready to invest with purpose, and leverage design as a powerful tool, this podcast is for you. There is a big difference between being cheap and being strategic when it comes to renovations, interior design, and construction altogether. It doesn't matter if you are building something from the ground up, you're investing in a property or doing a small renovation. We have seen people think they're saving money up front by going with a less expensive option only to actually be costing themselves more money in the long run. Adversely, We've also seen people assume that, oh, this is the most expensive option, so it must be better. But that is really not strategy at all. A Speaker 2 (2:01) smart investor is not asking, how much do I have to spend? The smart investor is actually looking at, what's the return that I'm going to get out of what I do actually have to spend here? So Speaker 1 (2:11) today we are going to be talking about where to spend, where to save, and how to know the difference. So let's dive right in. So I just want to kick this off directly to our audience, to our listeners, and ask you, where do you fall? Would you consider yourself to be cheap? Or would you consider yourself to be strategic? If you're not sure, here's one sure way to help you kind of navigate the unknown. If you're constantly looking through the lens of like, do I need to spend that money? You're probably going to fall more into that cheap category versus... If you are thinking more like, what is the outcome if I don't do this or I don't spend that money? You're probably thinking with a strategic mindset. Yeah. Speaker 2 (2:55) With strategy, you're looking at it on both sides of, can I achieve my outcome if I do spend the money? Speaker 1 (3:03) Or Speaker 2 (3:03) can I still achieve that if I don't? And if the answer is I need to, you're willing to go for it and do it. Speaker 1 (3:09) Not, Speaker 2 (3:10) I just can't. You know, there's a different there's a different thought process to all of it. Speaker 1 (3:15) Yeah. Strategy is going to be rooted more in cause and effect Speaker 2 (3:20) versus Speaker 1 (3:21) cheap is more. I'm constantly avoiding having to spend the money. That is not the best place to be, because if you're only assuming, you know, how can I cut costs? You could be compromising the integrity of the project altogether. Where Speaker 2 (3:36) do you, Speaker 1 (3:37) Justin, think that people. tend to spend, or I should say, miss the mark and like the illusion of saving money, but in the outcome actually being costing them more when it comes to, you know, interior design, renovation. I Speaker 2 (3:54) think that sometimes a lot of people miss that mark by just automatically going with the cheapest bid. Because in a lot of those, there are corners that have been left out. corners that are going to be cut or things to your point that in the end, they're going to compromise the overall integrity of your project. Also, you know, going with maybe a little bit shoddy or workmanship, things of that nature, which again goes back to that whole integrity of the build and the project. Short-term savings in Speaker 1 (4:24) many Speaker 2 (4:25) cases end up with long-term, longer-term expenses that wind up costing more. Yeah, Speaker 1 (4:33) I think. This is a good identifier for our listeners. If you're like, okay, great. Well, how do I know I fall into that category? We talk a lot about having a plan before you really start executing anything. And that is the reality of this business. You really need to know what you're building, what you're renovating, what exactly you're investing in before you start doing that. So one clue is that if you're getting a bid for a job, and it's very open-ended. Maybe you're like, we're going to update the kitchen, but you haven't really given specs exactly how that update's going to look, or you don't have an actual design around it. Odds are your estimate is just that. It's an estimate. It's going to have a pretty big variance. And depending on how that contractor bids out that work based upon the variance they're using could be significantly different. And therefore, you could be choosing somebody who's essentially telling you it's going to be less than what it really is because there's just too many unknowns. You don't have enough. And on the flip side of that, there's going to be people who are going to bid more aggressively for the same reason. So if they know, they have a general idea like, okay, yeah, we're doing a kitchen remodel, but we don't really know what the cabinets are going to be, what the finishes are. So they usually give you an allowance or some type of buffer, and then they'll put a percentage contingency on top of that. So then you might get a really inflated bid and you might be looking at, you know, comparing the two and you see a pretty drastic difference. And so you're thinking, oh, it's the same work. I told them the same thing. I'm going to go with the lower bid and it may not actually pay off in the long run for you. Speaker 2 (6:19) Yeah, that lower bid may have started the initial bid with. cheaper material. Speaker 1 (6:26) You Speaker 2 (6:26) know, if you're expecting a high-end custom kitchen, but your bid was based on prefab that you can go down to the local hardware store and buy versus that custom cabinetry maker, there's a huge difference in your cost. And you're not going to be happy in the end because you chose that lower bid that didn't meet your standard anyways. And a lot of times what you really need to do in evaluating these is really get down into the weeds or the nuts and bolts of the bid of what is included. And this is where, you know, again, to your point, you've got to have the specifics to the design and the deal of what you're wanting to do and making sure that your contractor or your tradesman who's bidding for you understands that. Speaker 1 (7:18) And so Speaker 2 (7:18) they can properly bid out that work. Speaker 1 (7:21) And that you understand if you're not at a point where you've solidified, let's say your cabinet fabrication design, you have to make sure you're articulating on to whoever you're going to be working with. Like this is going to be custom cabinetry with this wood material and a paint finish or a stain finish. Like every little detail is going to affect the price point. But if you're just arbitrarily... going with the lower without the finite details, then you could be, you know, seemingly costing yourself more in the long run because not everything has been revealed. There's not clarity and understanding of what that price is actually going to get you. Yeah, that's where we typically see people run into that type of scenario. And I Speaker 2 (8:10) would even say on the flip side of that too, sometimes looking at that higher end build, even if you weren't going for that highest end option, person is... priced you out at the higher option to say, hey, this is kind of like your high-end number, but we can work to come down by maybe making a few tweaks here and there. They're actually going to be a little bit more transparent than the guy that's, oh, that's up. That's up great. Well, you want to get this next piece? Oh, that's an upgrade. Speaker 1 (8:36)