Business: The Myth & Math of Square-Foot
No contractor wants to talk to customers about square-foot
cost. But the topic will inevitably arise, because everything
about planning a construction project — especially a new
home — leads the customer to think in terms of cost per
When customers buy a set of stock plans, it says right there on
the prints how many square feet the project involves. If they
hire an architect, they begin by telling him or her how many
feet they need and what they want to spend — and,
naturally, they assume there's a linear relationship between
square feet and cost.
The purpose of this article is twofold: first, to explain how
to think about square-foot costs yourself; and second, how to
explain them to the customer in such a way that you can still
get the job.
Educating the customer on this topic is part of your job, and
you may need to do it more than once during a project. For
example, whenever I quote a cost-per-square-foot range to a
potential customer, he nearly always forgets the high number
and fixes his mind on the lower one, thinking, "That's what my
house will cost." I have to remind him that the production
costs for the project are the culmination of the estimate's
many cost-category line items.
In other words, final price depends not only on a building's
size, but also on the house's geometry, the level of
architectural detail, and the lot conditions.
Geometry, Layout, Volume
Certainly the shape of a house has much to do with what it
costs to build. To get this point across to customers, I make
an exaggerated comparison between two structural footprints
that vary in geometric form but not in size. Both represent
structures that measure 100 square feet (see Figure 1).
Building Footprint A is a 10-foot-by-10-foot box. Building
Footprint B is a 2-foot-by-50-foot elongated rectangle.
Figure 1. It's unlikely
that anyone would build a 2-foot-by-50-foot house — or
even a 10-foot-by-10-foot one — but examples like this
are useful in explaining to customers why two houses with the
same square footage can cost radically different
Based on an estimating tabulation summary, Building A has a
40-foot perimeter, which requires 40 feet of excavation,
footings, stem walls, exterior wall framing, roof framing, wall
sheathing, siding, soffit, fascia, exterior paint, insulation,
drywall, interior paint, and baseboard. Building B, by
contrast, requires 104 lineal feet of those same items. That's
260 percent more than — or 2.6 times — the amount
of labor and materials needed by Building A. (Both structures,
it's assumed, have the same roof area of 100 square feet, not
including overhangs and pitch).
This example demonstrates quite clearly that the cost to
construct or remodel each of these two buildings differs
radically, despite their equivalent square footage.
A more realistic example. Once
clients have absorbed this lesson, I show them a more
real-world example involving two distinctly different homes
with the same 3,850 square feet of livable area (Figure 2). The
first home has six outside walls and a simple roof form. The
second has many more walls — some curved — and a
correspondingly more complicated roof.
Figure 2. Showing
clients the footprints of simple and complex houses with the
same square footage can help make the point that this
measurement is not the only determinant of cost.
Communicating these concepts to customers with words alone is
difficult, so it's important to show them drawings. With
illustrations to refer to, it's much more likely they'll
understand what you're explaining — and agree with your
conclusions. And if at some later date the customer asks why
something costs so much, you can refer back to the drawings and
remind them that when something is complicated it costs more to
Added cost for cathedral. One popular detail that
costs a lot more than people think is cathedral ceilings. I use
a drawing to explain this concept to customers too. It shows
two houses with identical footprints; one has flat ceilings and
the other vaulted (Figure 3). In my experience — and I
have the job-costing to prove it — the shell of a house
costs 40 percent more to produce when all the rooms have
Figure 3. Adding
cathedral ceilings significantly increases the cost of the
shell. These houses are identical except that one has flat
ceilings and the other vaulted. It's clear from the drawing
that vaulted ceilings require more material in the interior
partition walls. (They also require more labor.) What's less
obvious is the increased structural complexity and the need to
run ducts somewhere other than in the attic.
How can this be? Well, sloping the ceilings affects framing,
electrical wiring, insulation, drywall, painting, and —
most significantly — hvac ducting. In a flat-ceiling
home, all the ductwork can be run through the attic; if the
ceiling is vaulted, that may not be an option. To house the
ducts, you may have to frame in a soffit or bury them under a
slab. And without the possibility of collar ties, you may have
to use scissors trusses or a bearing ridge.
So if the customer suddenly says, "Hey, we want to change all
the ceilings (or just one of them) to cathedral," don't be
foolish enough to give him a price off the top of your head. Go
back to the office and estimate what the change will really
cost based on its impact on all the elements described
Effect on schedule. When you're figuring out how much extra to
charge for vaulted ceilings — or for anything else that
increases the volume of the building — don't look at just
the material and labor. Think about the schedule. With more
volume to build and finish, the project might take longer to
complete; if you don't factor in added overhead, you'll have to
eat that cost yourself.
The old adage "time is money" really does apply here!
Livable Square Footage Vs. Total Under Roof
Customers tend to perceive cost per square foot as referring
only to livable square-footage area. To them, garages,
basements, porches, and attics are not part of the equation and
should be practically free. In earlier times, when houses were
simpler and garages were smaller, these areas probably didn't
cost very much. Today, though, they're much larger and include
all kinds of amenities.
What are the most expensive rooms in a house on a
per-square-foot basis? Typically the kitchen, master bath, and
family room, because they contain more plumbing and wiring and
pricier finish materials than other rooms. But if you include
the cost of the shell, the cost differences between various
parts of a home are less than you might think.
Garage vs. bedroom. Most customers expect to pay more for a
larger bedroom — but not for a larger garage. Yet in most
cases, the two finished spaces are more similar than they are
different: Both have footings, stem walls, floors, framing,
windows, wiring, and drywall. Bedrooms have interior-finish
items like carpeting, closet trim, closet doors, a bedroom
door, base, and casing. Garages lack floor coverings and
closets but have overhead doors, door openers, 5/8-inch Type X
drywall, a fire-rated door to the house, and a side door to
exit the building.
If you make a comparison between bedrooms and garages based on
how much they actually cost per square foot to build, you'll
find they aren't that far apart. Assuming both areas are built
slab-on-grade, my job-costing from past projects has shown them
to be nearly identical (within 2 percent) in cost per square
This is something you may need to communicate to customers
— and you should definitely be aware of it yourself, so
you don't end up giving garage space away.
Price perception. Because customers can't stop themselves from
thinking in terms of cost per square foot, I have found it
useful to counter by thinking in terms of the total area under
A few years back I built someone a new home for $785,400. It
had 3,850 square feet of livable area and a 750-square-foot
three-car garage. It was a much easier sell when I quoted the
customer a $171-per-square-foot cost ($785,400 ÷ [3,850
+ 750]) for total under roof than it would have been had I
quoted him a $204-per-square-foot cost ($785,400 ÷
3,850) for livable space.
There's nothing dishonest about this. The cost to the customer
is the same either way — and it's unrealistic to pretend
that areas that aren't livable have no cost.
Add Space for Less
As someone who is serious about job-costing, I have a good
sense of what my projects actually cost to build.
Consider the production costs of two spec houses I built on
flat lots in the same subdivision with similar exterior details
and rooflines. The homes had identical kitchens, master baths,
and 900-square-foot three-car garages. One home was 3,500
square feet (livable) and was built for a cost of $868,000. The
other was 4,500 square feet (livable) and cost $935,000 to
build. Does this make sense? How can the home that's 1,000
square feet larger cost only $67,000 ($67 per square foot)
The answer is simple. The 3,500-square-foot floor plan was
expanded to 4,500 square feet. The added space was a two-story
"cube" with 500 square feet per floor. By the time we built the
second home, the production costs for the expensive areas were
known, because we had built the original version of the plan
before. The added space was inexpensive because, like the
theoretical 10-foot-by-10-foot house discussed at the beginning
of this story, the cube contained minimal added material and
Of course, when we put the house on the market, customers did
not distinguish between the expensive and inexpensive space, so
the added rooms greatly increased our profit on the project.
This is a tried-and-true method for making money: Know what
square footage sells for and figure out a way to build it for
less than that.Dennis A. Dixonis a contractor, author, and speaker in