Line Item Costing is Not the Way to Build Trust

Line Item Costing is Not the Way to Build Trust title on white background with photo of Amelia Lee and Duayne Pearce and Live Life Build Logo

Do you use line item costing in your home building proposals?

Find out how avoiding line item costing can enhance transparency and build trust with your clients. 

Watch the video now, or read the transcript below. Be sure to also subscribe to the Live Life Build YouTube channel.


I know they’re not the cheapest, but you get what you pay for.

Understanding the Line Item Costing


Alright, guys, hang on to your hats. This one is a cracker. So this is something that comes up quite often, and I definitely know that it’s one that our members and a lot of builders struggle with dealing with this situation.

Amelia, what do you suggest that a builder do if they’re dealing with a client who is expecting a detailed proposal that has a line item cost beside every item? I know this one can just really make you sink back and think, oh my God, how am I going to handle this? What am I going to do? And it may not even be a client. It could come from a designer or architect as well. 


Lots of builders create quotes or proposals like this by default. They put together their proposals with all of either the trade packages or what’s included in the project. They put a price point beside each of those. Then, they put the total at the bottom. 

Now, something that I teach homeowners regularly is that when they seek prices for their projects from builders, they shouldn’t expect a line item quote or proposal. They should expect a line item scope and then a total project cost. 

What is really important to understand in the psychology of how a homeowner looks at how their home is put together and how you, the builder, present this information is that the more you break down the cost of delivering the project into this line item, the more you are treating the job of delivering their finished home like a shopping cart of items. Like they’re walking into a supermarket, walking around the aisles, picking items off a shelf, putting them into the trolley, and then walking out to the cash register. And that is not the process of delivering a home. 

When homeowners see this line item costing, they inevitably start pulling out lines. If the prices come in, potentially, it will because homeowners generally expect their home to cost less than what it actually does cost to build or renovate. They’ll see these line item costs, and then they’ll start pulling items out. 

They might go and get an alternative quote from another kitchen joiner or from another electrician who inevitably will price it at cheaper. And then they’ll tell you as the builder, look, we want to use something other than your kitchen joiner. We don’t want to use your electrician. We’ve been able to get this for less. Or they’ll start seeing what they can pull out, shopping the lines to try and get that price down to a lower item. 

And it is that same thing when they might walk into a supermarket and instead of the premium item or the nice level, the nice cheese, they might decide just to get the black and gold brand today because that’s what they’re going to do to balance their budget. At the end of the day, they’re not paying you to walk around a supermarket, pick off the items, and package them together in a finished home. 

They are paying you as a building business to deliver a finished home that will stand the test of time, be of good quality, be delivered on time, and be as headache-free as possible. 

That means that you, as a business owner, should use the kinds of trades that you can rely upon and the kinds of products that you can stand behind. They will sometimes be the least expensive ones. 

Unfortunately, by putting it into a line item costing, you let the client then start to dictate to you who you should be using and where you can possibly get things for less, which may not be in the best interests of your building business, their home, or the quality that you’re going to be able to deliver. 


This one is a massive can of worms, and I have so many different opinions on it. For me, it’s no different from taking your car to a tire shop to get a new set of tires. 

You can get a tire for $400, or you can get a tire for $100. Is a $100 tire going to stick to the road or cause you an accident in the wet weather? There is so much. 

I think it’s important to educate clients on these things because, at the end of the day, it doesn’t matter what you’re shopping for; you’re always going to find a cheaper person. 

The Value of Trusted Trade Relationships in Quality Construction

In my business, we use the trades we use because of their quality, because of their standards. 


And the relationships that you’ve built with them over a long period of time. So you know that if there’s a delay, you’ll be able to call them and say, hey, you’ve got to wait a couple of days, but you know that they’ll come back because they like working with you and that they know that they can be reliable in that regard. 


But more importantly, their knowledge. Like, our Sparky is just incredibly knowledgeable; he’s a young guy, but we’ve got a couple of Sparkies who are very good at what they do. 

They’re not the cheapest, but you get what you pay for. And they communicate very well with our team. They deliver on our jobs. And that flows through everyone. Like our plumber is great. Our plasterer is incredible. Our painters are great. And it’s taken us years and years and years to build those relationships. 

But I know that if we were to do a light item cost with our client, they would find a cheaper price on every single one. But the difference is I know when my trade does it, it will be a great job. It’s going to be to my expectations. There’s not going to be defects. I’m not going to have to hold everyone’s hand. 

We’ve just found that in the past when we had situations where we were letting clients do their own trades, it was just a disaster every single time. You have to hold their hand. Because the other thing, part of this is that nine times out of 10, the client manages them. 

You, as a builder, haven’t had an opportunity to meet with them, see their past work, like check any of that sort of stuff out. You then end up on a job with a contractor that you don’t normally use. You’re paying them less than what you normally would pay. You’re holding their hand on everything. They leave the job thinking that the job’s fine and perfect because that’s the quality and the expectation that other builders let them get away with. 

And then the client’s winging at you because they want all this stuff fixed, and you’re like, well, I didn’t even engage this person. I warned you about what was going to happen. And it’s in your contract and you’re wearing the responsibility of that. 

That’s a topic for another day. But if trade work is happening on your job site, you, as a builder and the head contractor, are responsible for whether the client selected them or not. Are there processes that people could use or builders can use to get around this? 

The Role of Transparency in Building Trust


Yeah, I think it’s understanding why homeowners want to see this. And it’s usually because they feel that that’s the way that they get transparency and that they can trust that you’re actually delivering something and you’re not ripping them off. 

Homeowners are understandably nervous. They’ve seen all the same current affairs articles we have in the industry about the dodgy operators, sharks, and cowboys who take people for a ride. I have loads of homeowners telling me they just feel like they’re walking around with a target on their forehead, waiting to be taken advantage of. 

And when they’re only doing this once or twice, it’s more money than they’ve ever spent on anything. And they know what it means to them. Understandably, they feel that they need to see how that money is going to be spent so that they can trust that you’re not going to rip them off, that you’re not just shoving and jacking up prices just for the sake of it. 

To help a client understand, transparency and being able to see all of this and trust that you’re going to do a good job are two very different things. 

It’s important that in your business building, you look for opportunities to build a trusting relationship with them so that they feel you’re operating with transparency and integrity. 

And they don’t wait until this proposal to question or know whether you’re actually going to do the job they’re asking of you. And that’s using things like the PAC process and those types of things. But when they trust you, they won’t expect to see how you price their home because they’ll be trusting you to deliver their home the way that you see fit to meet their expectations of the quality that they require. 


My other big thing with this is that transparency is great, but if you don’t have a scope of work behind a figure, then the figure is worth nothing. 

To me, a very detailed and broken-down scope of work for every single aspect of a job is far more valuable than any dollar, like a breakdown of costings, because if you don’t have that, you don’t know what this plaster is doing. This plaster might have 90-millimeter corners. This plaster might allow for a square set. 

The price on the bottom of a page at the end of the day means absolutely nothing if you haven’t got a very, very detailed scope of work to go with it. But another huge part of this is builders knowing their numbers and having the confidence to know that they’re running a proper business, a professional business, and educating a client on how they will deliver it. 

Understanding Client Needs For Transparency


Most definitely. And I think that point of ensuring that you’ve got a line item scope, I say to homeowners, that’s what you wanna see because you wanna be able to understand that this builder has actually interpreted everything that’s in your drawings, in your specifications, that they’ve even read what you’ve put together in order to ask them for this pricing. 

That is far more valuable for you as a homeowner to see what’s been excluded, what’s been included, and see that they actually have thought through how they’re going to deliver your home and they understand all the ingredients in making that happen. 

I’ve received prices from builders where I had a very detailed proposal, and I’ve received from another builder literally two lines on a page. Now, as a homeowner, you can understand why you wouldn’t trust the builder who has done two lines on a page and put a price against it to have been thorough in the way they’ve looked at those drawings. 

Yet it’s much easier to trust a builder who has detailed out that home in a proper line item scope and then put a price at the bottom that they thought through thoroughly what that actually includes. 

Knowing your numbers is incredibly important because you can then educate the client about what it takes to actually deliver a home. 

Clients are getting their point of reference about building and renovating not from the experience of what it actually takes to build and renovate a home but from reality TV, stories they hear from friends and other sources. 

They can’t understand what it costs to run a building business, what it costs to wear the responsibility long term of delivering a home, all of those types of things. 


Differences between two business models. 




A lot is going on. 


So, knowing your numbers, being able to confidently position yourself as the authority in what you do, and taking the time to educate clients about why you do things the way that you do and why it costs what it costs. 

In the 20-plus years I’ve been doing this, clients have what they want and then what they want to spend. Generally, their budget is about half to three-quarters of what it needs to be for their home. 

It’ll always be a rude shock. You’ve got lots of opportunities for a builder to really shepherd them through that. Recognize yourself as the expert and the authority that does this every day and build in mechanisms in the way you communicate with them that build trust into that process so that you don’t have to break down your project costs into a line item scope that then they just treat like a shopping list. 


Yeah, so focus on scopes for work and try and avoid the line item costs. 

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