If I can be honest, there is one question I get over and over that I really don’t like to answer: How much do you charge per square foot?
I would like to suggest that this is the wrong question to ask if you are thinking about building a custom home. The question is always well intentioned, but nevertheless, it is a frustrating question to try to answer, probably because there isn’t a straightforward answer and it’s wildly subjective.
If you were shopping for a car, would you ask a dealer, What is the cost per cubic inch of interior space? Probably not, right? We all know that the brand, model, and features of any given vehicle will dramatically affect the cost of a car—while the amount of interior cubic space has very little to do with the overall price.
Yet the most common question I get pertains to the cost per square foot, so I will attempt to answer it as best I can! However, just as a Honda dealer wouldn’t answer questions about the cost of a Ford F-150, I will only be able to speak to the pricing of the homes that we have built in the greater Colorado Springs market.
In 2019 our homes ranged between $190 per sq. ft. and $265 per sq. ft. You might be wondering, But what does that include? and Why is there such a wide range in cost? So first, let’s review a few terms and assumptions so that we are on the same page.
“Square footage” refers to the amount of heated space below the roof, not including garages, porches, or decks. This would include the kitchen, bathrooms, bedrooms, hallway, basement (whether finished or unfinished), and so on, but it would not include the crawl space or attic.
Our “cost” would include soft and hard costs but would not typically include landscaping, decor, window coverings, or furniture.
Soft costs are architectural, engineering, design, permit, insurance, and professional fees. Not included are any loan origination fees or construction interest payments that you would make during the construction period.
Hard costs are all tangible assets used to build the project: all labor and materials, subcontractors, supervision labor, and builder profit, overhead, and contingency. So everything from tree removal and excavation, well drilling, septic systems, lumber, drywall, and even the final cleaning service.
The most simple way to think about what is included in a Gowler Homes’ price is to imagine a finished home on the day of the final walk-through (before you move in)—minus the land—and that is what we include in our scope of work and pricing when we talk about cost per square foot.
As a general rule—and with all finishes being the same—the smaller the home, the higher the price per square foot. The reason for this is that although some costs vary with the size of a home (e.g., drywall and flooring), other costs are static (e.g., drilling a domestic well, installing a driveway, or supervising a project). And it takes roughly as long to build a 2,500 sq. ft. home as a 5,000 sq. ft. home. Consider the following: If the cost to drill a water well is $15,000, that would equal $3 per sq. ft. on a 5,000 sq. ft. home and $6 per sq. ft. on a 2,500 sq. ft. home. You would need the same well no matter the size of the home, but the cost per square foot is double on the smaller home.
Another challenge for using cost per square foot as an accurate means of comparison is that there can be a drastic variation in cost between two homes of the exact same size and layout, simply because of the different materials used. For almost every item in a custom home, there are low, medium, and high price points. For example, if a home has 30 windows, you could price basic white vinyl windows at $300 per window and your window budget would be $9,000. For the exact same house, you could price top-of-the-line wood-clad aluminum windows at $1,000 per window and your window budget would rise to $30,000. Same house, same number of windows…but a $21,000 difference between window packages. If we were building a 3,500 sq. ft. home, this difference in pricing would affect the price per square foot by $6 per sq. ft.
Consider another example: If you were to price kitchen appliances in a 3,500 sq. ft. home, you could install GE Profile appliances for around $10,000 or Viking or Wolf appliances for closer to $40,000. So there would be a $30,000 difference in overall cost—$8.57 per sq. ft—simply due to the appliance package.
In the two examples above, there is a difference of nearly $15 per sq. ft. for the same 3,500 sq. ft. home with the only exception being the windows and the appliances.
Now you can see why using cost per square foot can be a misleading metric when considering building a custom home. Asking how much a builder’s cost per square foot is the wrong question. The right question is, What is my total cost and what is included? If budget is the key driver, then we can modify the size and finishes to stick to your budget target. You wouldn’t buy a car based on its price per interior cubic inch, and you shouldn’t select a custom home builder based on price per square foot.
This is why we use the Design + Build philosophy. We can design anything, and we can build anything. What matters is designing a home that can be built to meet your needs and wants within your budget.