Make sure to be reasonable and tactful. Explain nicely and firmly that you are spending a lot of money under the original budget and need to be frugal with
Ask the contractor to explain why the price rose so dramatically from the initial estimate. He will likely say something about unexpectedly high expensive labor and materials. Request an itemized bill or invoice, explaining that you do not feel comfortable remitting any payment until you can further examine this issue.
Every contractor I've worked with has taken 50% up front and 50% when the job is finished. This is normal. One thing I would recommend is you vet your contractor thoroughly--check reviews, make sure they have a legitimate website, testimonials etc...
Politely Decline
Try a two-sentence note when responding to an estimate such as, "Thanks for your quote and for taking the time to look at our project. We decided to go with a different bid." Yes, it can be that short and easy.
Keep it simple and positive. Just say something along the lines of, “I'm so sorry to miss out on the fun, but X isn't in my budget right now. But I'm so happy for you, and I'd love to celebrate in another way!”
When you gather estimates, you can always negotiate the cost of the project with any contractor. Many general contractors are willing to negotiate their prices and terms if they're competing for a job.
How Much to Pay a Contractor Up Front: A Guide to Contractor Deposits. Most down payments fall between 10% and 25% of the project cost. Contractors should never ask for more than 50% up front. Never pay in full before work has begun.
Most general contractors use a markup of between 15-20%. However, contractor markups largely depend on the project and average costs in the area.
The best way to be certain is to inspect the invoice, ask questions, and do not settle for vague explanations. If you're suspicious about being overcharged, talk to a lawyer about getting an expert to review your invoice.
If you've done all of the above and are still getting the money objection, here's what to say: 'You reached out to me because you need help with [insert their key problem]. If money/price wasn't an issue, would you still want to work with me? ' If they say yes, move on to the next question.
If the discrepancy is more than 10% to 20%, that difference could be a financial hardship for you. Sometimes, the company will work with you, especially if you have professional help when negotiating the increased costs of the project. Other times, you may have to file a complaint.
Pay The Contractor The Final Payment When You're Satisfied
The bottom line is that you shouldn't pay the contractor until you're fully satisfied. Make yourself a checklist and make sure you check each box before releasing the final payment.
Net 10, Net 30, or Net 60 (found on the invoice) simply indicates that the contractor's payment is due 10, 30, or 60 days from the date of the invoice, respectively. Risks: This is the most common payment term for independent contractors, and there are few risks associated with it.
Typically, a reasonable deposit is around 10-20% of the total project cost, though this can vary depending on the nature and length of the project. Be wary of contractors asking for more than this without a justifiable reason such as expensive materials, etc.
The contractor has an obligation to complete the job at that price and cannot put on additional charges without your consent. When both parties have agreed to a quote, they are bound by the contract. For this reason, the quote should be in writing and detail specifics about the job.
Don't negotiate if you're happy with the entire package
But there's more to a job than just the money. It could come with good perks (like the ability to work remotely more often), better work-life balance, or even a better learning experience.
Communicate your concerns about the pricing and ask for clarification on how they've arrived at the figure. It's important to maintain professionalism and avoid confrontation; express your desire to continue doing business while also being clear about your budget constraints.
This should be done in writing and should include the reasons for termination, the date of termination, and any other relevant details. It's important to remain professional and avoid emotional language. Keep your communication clear and concise.