In collaboration with Holly Home Renovations

Homeowners often start a renovation project with one big question: How much will it cost? Unfortunately, the answer isn’t as simple as “price per square foot.” Whether you’re considering a kitchen remodel, a bathroom refresh, or a full home renovation, costs can vary significantly depending on the project's location, type, materials, and labor. One of our goals within the industry is to have more open conversations about what things cost, because many internet and media sources can be misleading.

At Bound Collaborative and Holly Home Renovations, we believe building trust with your design and construction team is the most important part, so you can feel comfortable having cost conversations and make informed decisions to best suit your budget.

New Construction vs. Remodeling: It’s Not Apples to Apples

It’s tempting to compare renovation costs to new construction, but the two are fundamentally different. Remodeling often involves working within the quirks of an existing structure—hidden plumbing, historic electrical systems, or custom materials—all of which affect price and scope.

A new build starts from a blank slate, a cost per square foot figure often includes site work, infrastructure, and other “set-up” costs that remodeling doesn’t require. The overall square footage in new construction is also much higher, making the total cost per square foot lower. Typically renovations include complex, high cost per square foot spaces like kitchens and bathrooms. Renovation requires surgical precision—more labor, more unknowns, and often more creative problem-solving. That’s why cost-per-square-foot comparisons rarely tell the full story.

The Skilled Labor Factor

Labor costs have changed rapidly over the last few years based on demand and the availability of skilled labor. Minnesota specifically has many regulations and requirements for contractors, in the interest of public safety, but it makes running a construction business very expensive. Contractors must balance transparent communication about fluctuating rates with the risk of scaring off potential clients.

Different types of projects, kitchens, bathrooms, and additions, also require specialized trades. A tile setter’s rate differs from a cabinetmaker’s, and both differ from an electrician’s. Knowing who’s involved (and how they’re compensated) helps explain why your quote looks the way it does. One of the primary benefits of a general contractor is the relationships they have with their subcontractors and laborers. They have built strong relationships that make sequencing, communication, and collaboration more streamlined for your project, and if a need or problem arises, they can quickly respond.

Pricing Models: Cost-Plus vs. Lump Sum

There’s no one-size-fits-all way to price a renovation. The two most common approaches, cost-plus and lump sum, each come with trade-offs.

cost-plus

This model is often described as “transparent,” because you see actual material and labor costs plus an agreed-upon markup. It protects the builder from absorbing unexpected expenses, but those costs fall on the homeowner.

Pros: You see where your money goes; changes are easier to see.
Cons: There’s no guaranteed final price. If material or labor costs change during the project, the cost will be passed on to the homeowner.

Lump Sum

With a lump-sum contract, you agree on a fixed price upfront. This can feel more predictable, but without strong trust in your general contractor, it can feel like costs are being hidden.

Pros: You know the total cost from day one. The general contractor is guaranteeing the price, so if a portion of the labor takes longer than anticipated, that is on them.
Cons: It can feel less transparent, and contractors may build in contingencies to protect themselves.

In practice, both models often land in a similar place financially—the path there just looks different. Both pricing models require clear communication about the project scope and any changes that take place during the construction process.

Building Trust Through Transparency

Homeowners increasingly turn to Google, Houzz, or HomeAdvisor, even ChatGPT for guidance, but these platforms can’t account for local regulations, labor markets, or the nuances of your home. Even magazines about home design and renovation are lacking in sharing the true and full cost of projects. In many ways, this is understandable, as homeowners don’t necessarily want their neighbors, coworkers, or the general public to know their investment. We highly recommend starting a conversation with a local designer or contractor so you can understand how much your project could cost and/or how far your budget could go.

Transparency isn’t just about numbers; it’s about scope. Understanding the full extent of the project early and what parts are most important (cabinetry, lighting, flooring) helps prioritize where it makes sense to splurge and where to save.

Regional Realities: Why Location Matters

Your zip code plays a major role in renovation costs. Minnesota is one of the most expensive states to remodel compared to the rest of the Midwest due to strict regulations, insurance requirements, and permitting costs.

For example, kitchen plumbing or electrical permits alone can run $1,800–$2,000. In states like California, labor costs are generally lower, and oversight and enforcement are lighter, but projects are generally larger and more elaborate. Each region presents its own balance of risk, cost, and compliance.

Behind the Scenes: How Contractors Keep Projects Running Smoothly

A successful remodel depends on more than just pricing—it’s about relationships. Good general contractors check in regularly with subcontractors to ensure they’re supported. When tradespeople feel valued and paid fairly, they stick around long-term, so when warranty issues arise, they’ll be there to help.

That reliability isn’t something you can get from a low-bid online estimate. It’s built through professional integrity and mutual respect.

The Bottom Line

Renovation pricing isn’t simple, and that’s okay. The goal isn’t to find the cheapest number; it’s to understand where the numbers come from and partner with a contractor who values a high-quality end result and a partnership that will make the process as smooth as possible for everyone involved.

By asking the right questions early and choosing a builder who explains their pricing model clearly, you’ll not only protect your investment, but you’ll also enjoy the process of creating a home that truly reflects you.

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