We’ve all heard it before - maybe even said it ourselves:

“It costs about $150 a square foot to build, right?”

Seems simple enough.

Got a 1,500-square-foot plan? Cool - $225,000. Done deal.

But here’s the problem…

That number doesn’t mean anything unless you know what’s inside it. And too many builders - especially those coming from the rehab world - treat cost-per-square-foot like a universal truth.

It’s not.

It’s a starting point at best. And unless you account for the four factors that actually shape your real costs, that number is going to mislead you.

So let’s break them down - the four things that make or break your true cost to build.

1. Are You Accounting for GC Fees?

Here’s the first one most people miss - especially if they’re pulling rough numbers off Google or talking to a builder buddy.

When someone gives you a cost-per-square-foot number, does that number include a general contractor fee?

Because it should.

You either ARE the GC (and need to account for your own time) - or you’re HIRING the GC (and will be paying for theirs). Either way, GC costs are real. They cover supervision, liability, coordination, insurance - and they need to be baked in from the start.

Leaving GC fees out of your cost-per-foot math is like leaving framing off the material list.

You won’t notice it right away…

But it’s gonna hurt later.

2. Are You Including Site Prep?

This one’s the biggest trap for new builders.

And it’s why we always teach: separate site prep from your cost-to-build.

Because they’re not the same.

Your “cost to build” should refer to what it takes to build the house - once the lot is ready.

Site prep is everything that happens before that:

• Clearing trees
• Grading the land
• Utility hookups
• Drainage and erosion control
• Permits and required infrastructure improvements

If you lump these together, your cost-per-foot number becomes a moving target - and you lose the power of standardization.

And worse? If you forget to budget for them at all, you can go from profitable to panicking real fast.

Pro move: Get a clean, predictable cost-per-foot for construction only - and estimate site prep separately for every deal.

3. Are You Thinking About Scale - Even in a One-Off Build?

Even if you’re building just one house, there are still ways to lower your cost per square foot - just by being efficient.

Here’s what we mean:

Some costs - like delivery fees, dumpsters, permits, and project setup - are the same whether you’re building a 1,200 sq ft house or a 2,000 sq ft house. If those fixed costs are spread over more square feet, your cost per foot goes down.

The layout matters too. If you keep things simple - a clean foundation, a basic roofline, minimal custom work - the job runs smoother. Trades move faster. You waste less material. You avoid delays.

That’s what we mean by economies of scale on a single project.

It’s not about building 10 houses. It’s about getting more efficient - even when you're building just one.

The more predictable and repeatable your plan, the more control you have over your numbers.

4. Are You Adjusting for Level of Finish?

This one’s subtle - but critical.

When someone quotes you $150/sq ft (or $200, or $120, or whatever), what are they actually building?

Vinyl floors or engineered hardwood?

Standard tub or custom tile shower?

Laminate countertops or quartz?

Level of finish matters. A lot.

Even with the same exact floor plan, the finish level can swing your numbers significantly - and the impact adds up fast.

So whenever you hear or use a cost-per-foot number, ask yourself:

“What’s included in that finish level?”

Because if someone builds high-end customs and you’re planning to build rentals…

You’re not comparing apples to apples.

Why This All Matters

Your cost-per-square-foot number is only as good as what’s included in it.

So when someone throws out a number like “$150 a foot,” don’t just take it and run with it.

Ask what’s in the number.

• Does it include GC or PM fees?
• What level of finish are we talking about?
• Are we leveraging any kind of repeatable systems or process?
• Is site prep accounted for - or is that on top?

Getting this right will make your numbers real, not rough.

And in new construction, where margins can be tight and surprises get expensive - real numbers win.

Final Takeaway

If you want to run profitable new builds, you can’t just use cost-per-foot like a back-of-napkin estimate.

You have to break it down, build it up, and own every piece of the budget.

Because it’s not just about what you build - it’s how you think through every cost that gets you there.

Join our nation-wide community of builders and rehabbers to get access to all the support, tools and guidance you need. Explore the membership & book a call to see if TRP's right for you: https://www.therehabbersplaybook.com/TRP-membership