Building Great Homes Vs Earning Great Profits - Business

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I can't seen to do both. When I price homes to be as amazing as the client expects, they get shell-shock and look for someone to lie to them about their cost. I lose jobs like this regularly.
Interestingly, I often lose these jobs to millionaire builders who are known scammers. Why do I keep losing to losers? How can I keep my quality standards and my profits? It is frustrating handling this workload and liability, turning out amazing homes and still turning out single digit profits while staying underpaid. Am I the only one?

Give them a dirt cheap price then keep the change order book close during the job.

That is what my competition does. The result is always angry clients. I'd like to do honest business and just deliver their expectations up front. I can't sleep if I have pissed off clients. I have been voted the Best Builder in Sarasota two years in a row by the public so it is definitely not a public image thing. I just can't seem to make the client understand the value BEFORE we build. Is it the market? I got started right at the beginning of this crap economy so I don't know the glory days.

That was a joke. I should have put a lol in there. Sorry bout that.
I feel that some times pride of your craft is the reason you work. I understand that we all have bills to pay but if you love how you mold your craft then it will help you out in the long run IMO.
Maybe bring a portfolio with you when you meet with clients to show you are a bad a$$ mofo!

Thanks for clarifying.
They all know me here. I win lots of awards and get TONS of press. I just can't seem earn what I should. Hell, Pulte earns 11.5% in a bad year. WTF?

Explain what they do and what you do in your presentation.

Then the customer doesnt dare to do business with a change order artist.

I feel your pain. In large part, I think it's the market. But I can't rely on that for fear it will make me lazy.....so I keep trying to better my presentation(s).

As much as I like to talk details about WHY and HOW I do what I do, and how the customer benefits as a result, I feel often times the customer is disinterested.

Many nights I come home and praise the track builders for their approach (lots of sizzle, little steak)....cause that is what the customer wants....or so it seems.

When I'm real pessimistic, I dwell on the fact that the customer wants everyone to work for $5/hour, or less, so they can have what they want. But if roles were reversed....well, you know the rest.

EDIT:

I guess all you can do is keep on keeping on. Just keep emphasizing what differentiates you, and if you're having a specific issue with low-ballers gouging customers with upgrades later, hammer on that, in a professional way.

I'm the same way. What's standard for my customer's is often an expensive upgrade charged by other builders. I use the car comparison.....20 years ago (roughly) power windows were an option that cost extra.....but everyone wanted them.....so why not make them stardard. In our industry, I'd say the comparable are ceiling fans, or recessed lights, or granite, etc etc etc

Ahh.... if only.
I do, quite clearly, explain the scam process. I have gone so far as to share my entire estimate (without leaving it for them) including my profits (which is hardly a deterrent).
It seems as though people just want to believe they can get something for nothing right now. My target market is $600k-$2mil. I am design/build mostly. I am averaging only 6-7% per job right now INCLUDING design. This seems ridiculous for what I am providing.
I lost a job today that was well specified (designed by an architect). I rarely bid but I decided to try on this job. My estimate was $1.42 million with a 9% margin built in. I lost the job to a $1,040,000 estimate from a contractor who lives in a $3 million home and has a 42' sportfish. I showed them my estimate to try to save them. They responded that his costs are lower than mine. I explained that he uses half of my subs and I save money with an in-house framing, trim, and carpentry crew. They said they would rather have used me but it came down to price. Unbelievable.

Seriously. What happened to the America that valued workmanship and quality? If I were a slimy d-bag building junk with a red door on it I would be rich.

I'm curious to hear some answers and opinions on this issue also.
I am hugely detail oriented and research the jobs and quote them down to the last detail. Because of this, I have lost jobs to those who throw a low number out and get the job torn up, then kill the customer with change orders. It's SOP around here it seems.
I will tell the customers this too. My proposals are lengthy, right down to the door stops. My final price includes EVERYTHING. But many of them ignore the obvious detail I give to my quotes and greed takes over.
When this occurs, I don't feel bad in the least about watching them walk into the lions den but I need a better way to phrase MY approach.

If your market is like mine, and I'm sure it is, there simply can't be much total project cost difference between experienced, engaged builders.....for a given set of blueprints. I can see SOME efficiency gains here and there, or margin hits if someone needs to keep busy......but normally I'd think it boils down to the relationship that is established with the customer.
That guy either screwed up is bid, or is taking a loss for whatever reason(s).

I have great presentations. I often speak publicly on sustainability yet I am not like a politician, but rather the approachable carpenter that I am.
100% of the clients I have lost in the last 2 years have told me they wanted to hire me but it came down to $$$$$$$. I have built homes that have been recognized and awarded nationally. I am not sure what else I can do other than make peace with wages.

I was a local carpentry contractor for years before building my own projects. I framed my competitor's homes. Their costs are the same as mine or higher. I build in many efficiencies by limiting subs in the extremely skilled areas of the project and managing my own crews.
I think it is just a bait and switch. I just can't figure out how to beat them at their own game.

Wish I had the answer. I think A LOT of it is the times we live in....and perhaps the culture of the current home buyer generation.
Maybe try and pre-qualify your prospects better. I think my cost structure is competitive and I'm not greedy, but I'll tell people if you want me to assemble a project (your new home) based on a collection of low bids, and THAT is my only criteria, I'm not your guy.
I hate to say it, but it seems the people north of 45 years old get this, those ~40 or less, don't understand.

I agree. My buyer is almost always building their last home.

Hallelujah, now this is a real topic with a real problem and this should be the longest thread on CT.
It's been my experience and my friends who are builders that the homeowners of today are NOT anything like they were. It's a tough deal especially for people like you who are committed to doing the right thing day in and day out.
In my area I we have one builder who is kicking tail big time, while everybody else is doing poor and saying the same thing you are.
In my opinion, I think builders like you described do this because this is the only way they can make money......bait and switch. The builder here that I described does this exact thing and I get to hear it from the HO. I've seen Home owners in tears over this.
Here's the thing. You can't educate most people on the reality of cost. For some dam reason you can educate them on a lot of things but not this.
Like you said, you are an award winning builder and have a lot of street credibility. I would guess the problem is #1 the type of customer.
You can be all nice and educate, you can even read sales books on the side. The problem comes down to a moral dilemma because if you change you become a fake person and have to use techniques to get a sale. This is not only uncomfortable but often times immoral.
You are who you are, don't change a thing. You build a quality product, don't change a thing. You are honest, don't change a thing. you see what I'm saying?
I deal with this also but on a small scale and there is only one solution.....Marketing.
Somehow you need to get into a position where align yourself with the right customer (marketing) and have more of these people call you (marketing). Doing this is what I had to do, I had to change my marketing and get more people to call so I can hand select the jobs I want. Somebody is willing to pay for and demand exactly what you offer, you just need to find these people. The type of customer that decides not to use you just isn't your customer, it's not you....it's the wrong customer. Stick to your guns and re-focus your effort on a new marketing plan.
Keep in mind that we use to be able to just do some marketing and customers come to us. Now we need to hand-weed customers more than ever before.....It's gotten tough and you're not alone.
That's the best advise I have for you anyhow and it works for me.
Mike

Show them your detailed contract and tell them that this is the price, no increases will be seen unless there is a change of detail.
Then have them compare your contract to the others and have them ask the others about the missing details that are on your contract but not on theirs. Then have them ask the other contractor point blank, will there be a change order/upcharge for this? After they get the answers then you will start to get people to hire you because you are an all included contractor and not a change order contractor.

I would have thought, during the boom times, customers would have been more receptive to the base price, plus upgrades model......vs. today. Another words, I'd think TODAY the candid contractor (catchy name) would have an advantage as noone wants to think they're overpaying for upgrades, etc.....
So, as a result, I pound the point home. I outline the details of what is standard, and included in the base price.
But I agree regarding the challenge of educating customers, when I tell them that, for example, a recessed light costs me, the builder $XX (what my electrician charges), and THAT is what I charge the customer, THEY (the customer) thinks they can go buy the recessed can and supply it, and they (the customer) should pay less.....never mind the switching, romex, labor, etc..........
I think I'm extremely fair regarding upgrades, but I can't seem to shake the customer from them thinking I'm screwing them somehow on upgrades.
It takes me through the end of a project by the time the customer finally realizes I have been above board and honest when I tell them what something costs. I've gone as far as to give them a copy of the invoice I paid, so they, the customer knows I spoke the truth. But it gets insulting sometimes when they imply my cost structure should be lower.....
Increasingly I'm thinking I need to find a professional method to simply confrim I'm not going to screw them on price or upgrades. And they can talk to prior customers to confirm......but like was said above.....the customer gets another, lower upfront price, and its hard to move them away from that....eventhough said contractor may charge MORE by the end of the project.

I am a custom builder as well and losing jobs to lesser competition. The good builders in my area are just sitting with nothing and the homes that are being built are being built on price as the determining factor. The builders landing the work are cutting corners and they are ending up with unhappy clients at the end. How they make money I do not know?
I have a few good prospects and I am really working hard to stay in touch with them and maintain a good relationship. I am feeding then warning signs along the way about my competition while being very careful not to bash anyone.
Another issue here is that some of my subs are working for these lower tier builders and not getting paid on time or at all. They are owed for several jobs while I pay in a timely manner. I basically informed one the other day that he was keeping my competition in business by carrying his jobs and I am effectively keeping both of them in business by paying on time. No more, he is done as long as I know that is going on.
The cream always rises to the top, I will not play the low ball numbers game. I don’t have the energy for that. Eventually the lower tier builders will be weeded out and the good builders and business people will be left standing. Unfortunately the weeding out is still going on.

I hear your regarding payment.
Here, for the title company, I have to have my sub's sign a waiver of leins...confirming I've paid them, in full. So, there is no way I could go to settlement without having paid my subs, unless I fudge the form. I have NO idea how other's get away with it, ethically.
I also tell my prospects how I treat subs how'd I want to be treated, and the customer benefits from that in my opinion. Rather than the other approach, where you treat your subs like chit, and just imagine the integrity and pride in their work.
While I've wanted to lower my standards and change my process to match competitors, I've decided against it. I'd rather do something else than be part of the loser crowd. Shame of me if I cannot persuade my prospects of my relative value.....and too bad for them when they have to live with the impacts of the low bidder.

Well said HHBG.

I dunno, I dont give everyone a fieldstone fireplace, I build what is their price point. Strip it down and hit them with the extras, or build specs and put em up for sale.
I think you make more money in the middle of whatever you do then on the bottom or the top, price wise. Maybe you need to add in a few more 2nd or 3rd home buyers and be more picky about the last home buyers you take on as clients.

Thanks for all of the replies.
As you all know, there is no simple answer. I am a design/builder so I can't mislead clients into believing they can have something that I simply cannot deliver within their budget. I cannot over promise and under deliver and I cannot mislead. I suppose I must pick my clients and be patient but that is easier said than done.
There is wisdom in the idea that the staying in the middle of the pack is more profitable but it is certainly hard to get noticed there. Most buyers I know are shopping lowest price or highest quality (without wanting to pay for it) but not much else.
It is nice to know that I am not alone in this. I appreciate the responses and would love to hear who else deals with this.

While we are not home builders we are high end deck builders (30K+) so I know what it's like dealing with clients in 600k to million dollar homes. I have found that if I can get the potential client to call our references we will get the job period. I can always tell when they have called our references as they are always excited to sign. They usually talk about how glowing our reviews were. If you can make people call your refs (and the competitions refs) they will see a difference.

This is a good thing. You are eliminating a lot of bad clients this way. You may consider raising your prices.
Honda makes a pretty good car called the Accord. You can get it decked out with a powerful engine, navigation, power seats and mirrors, automation, leather, yatta, yatta, yatta... However, many people will still go out and purchase a Mercedes with identical features at a much higher price.
Be the Mercedes and embrace the fact that you will lose a lot of cheap buyers.

I love it.
I often use car analogies to define our industry. I feel like I sell a Maybach finish at a Mercedes price as it is. My competition is selling a Kia disguised as a Lexus.
I grabbed a smaller job yesterday (about $350k) and negotiated a price that should leave me above 12% net. My client noted the slight increase in price above his desired budget. I explained to him the value of my process and why he should pay the difference and he agreed. It does happen on occasion. Afterwards, I called a client whose home I just completed for about $875k and discussed our relationship and what made him decide to hire me. He stated that it was my sincerity, obvious commitment to quality and my stellar track record that won him over. Then, he told me he would have paid another $50k had I asked for it and still would have felt like he got the deal he wanted in the end. He stated his only concern on the project came when I first handed him the contract. He got nervous when he saw the price. It was too low. He thought perhaps he was going to get shorted. Ask me if I learned a lesson. My gross sales may take a little hit this year but I have a feeling my net margin is going up.
Thanks for all of the feedback.

No be the Bently and stay away from people with new money who dont know how to create an image.

HardWay.....

I have to ask in Regards to you quoting the project at $1,420,000 ..With a 9% Margin Means your cost would have been $1,292,200.

The "Other Guy" quotes it at $1,040,000 And you said you assume he has a higher profit margin than you. Lets pretend He doesn't. His cost is $946,500. That means he is completing the same projects for -$345, 700 than you can.

You mentioned this was all architecturally spec, So i assume these quotes are apples to apples. Even if it is a $1,000,000+ home, $345 Grand Is a significant difference.

You also mentioned the other guy has done well for himself...and is obviously also a established builder in the area. What allows him to save almost 350k on the construction of the same house? Not only is he building a less expensive house, He is actually the builder the people are choosing to go with, even after they listen to both presentations. obviously he is offering them less...but it doesnt matter b/c he is winning bids.

Is it possible that just b/c someone is buying a expensive house you are mis-judging the wants of your clients and tacking in to many upgrades right off the hop?

No chance. There is no room for interpretation here. The architectural specs are 33 pages long and the plans are 42 pages long. Many of the finishes come in the form of allowances spec'd by the architect.
Here is where it gets interesting. 95% of the projects this particular architect draws are built by said contractor. The architect is tasked with reviewing the estimates. There is something shady going on for sure. My cost cannot be more than 2% different than the other builder's given an apples to apples comparison. We have a limited skilled trade pool here.
I can only assume deliver $50k worth of cabinets and pass it off as the specified $125k allowed. If you apply this across each allowance area in a home this size, he will make up the difference. Since his architect buddy does the CA, I think he won't blow the whistle and he'll grab some coin in the back end. This is the only way I think he could be that much lower. He is also probably not including impact fees, landscaping, fill dirt, utility connections etc....

Hate to say it but...as soon as one goes out of buisness, another jumps right in to take place. Don't sit and wait for that to happen. adopt a buisness model than can compete with these guys and get in on the cash grab.

Am I sensing some moral degradation here? Why stoop to their level of business? If this was in the car scene, then Mercedes, Bentley, and Land Rover ought to start selling economy student cars to appeal to the masses...right?!? [email protected]$% the masses! These luxury car companies have been around for decades (during the economic ups and down,mind you) Mercedes(1886), Land Rover(1948), Bentley(1919), etc.
These companies have established their brands and raised the bar for the lower class guys over the years. Mr. Hardway, keep doing the great, heartfelt work that you are doing. The customers that you have and will earn in the future will be the ones that have you based on their sense of moral excellent and pride in excellent work. If cheap things were the way of the world, then professional athletes, film stars, CEOs, etc. would be rolling around in Kias, Ford Focus, Honda Civics to brag on how cheap they went on the cars they bought.

Excuse my ranting, I haven't been much of a conformist or a follower my whole life. Just be yourself, Hardway. You definitely haven't been starving and neither has Mercedes-Benz.

....and BTW your "cabinets and doors built from trash" thread is a case in point of uniqueness in raising the bar......great work!

Ok, not to rain on the whole car parade here, but the comparisons only go so far. Everyone wants to compair themself to the "Bently"...But is that really the case here?

Hardway says he uses the same subs as the cheap guy... Does a Bentley have the same engine as the KIA? Do the same workers in the Bentley factory moonlight at the Ford plant on weekends?

Now I know nothing about car production costs... but I bet When you purchase a Mercedes, the manufacturer makes a bigger margin than the Ford does. How else could they post similar profits selling 1/10th of the cars?

Hardway mentioned that the cheap builder was presumed to be making more than he was.

Now I am not trying to rag on anyone here. And I am not saying that Hardway isn't the best dam home Builder in the country, and quite possibly he is, But maybe this is just a fundamental problem with your business plan.

A "identity crises" of who you are in the market and what type of client your trying to serve and what type of service your trying to provide people, for what price.

If you infact where offering a "Bentley" style business plan you would be 10X as expensive as the cheap builder,But you would be making 10X profit margin, but you would only be doing 1/10 of the jobs he does. Its all relative.

I never said he was a cheap builder. I said I believe he is dishonest. I also didn't say I use al the same subs. We have a limited pool of subs of the caliber I use. This leaves them competitive. He uses my subs numbers but my subs have never done work for him. Additionally, I am the only contractor in my area that generally uses my own labor for framing, trim, cabinetry, doors, etc... This makes me more competitive and more in control of my ability to control my own quality. I am also a roofing a pool contractor.
I never said I was THE best contractor although I am flattered you think I might be. The point of this thread is that it is quite frustrating when you are honorable, honest, capable, proven and competitive and still not make the margins that are deserved due to the desperate and dishonest.
Also, I never said I offered a Bentley. I said I offer a Maybach. Bentley lacks the attention to detail I prefer. How many Maybachs have you seen on the road lately? Me neither. There isn't much market for them especially if you were only selling them in one piss ant town and trying to make a living doing it. If you sell it at Mercedes prices, however, people will buy. No builder is worth 2x as much, no builder makes 2x as much profitable margin (honestly) but I agree that I would have to do 1/10 the work. In fact, I do.
You are correct. The car comparisons only go so far. There are a million talented auto crafters out there who could likely produce much better cars than what are offered today but it is nearly impossible to create a start up auto manufacturing facility. In contrast, every quality builder out there can work almost anywhere they choose with little expense. This makes our market more competitive through sheer numbers of competition unlike the auto industry which competes with few competitors. We compete on merit and sales and so do they but in the end Maybach is more like Toll Brothers than me. They are a production auto facility I build one of a kind homes with an amazing experience to my clients.
I guess the issue I have is not with my peers but with my buyers. The real question is, does anyone want the product I sell. I'll let you know when I figure it out.

I want a Mercedes.

With a Hurst shifter

Mike.....you're a trip.

Have you followed up with any of the customers who went with another contractor after the project was done to see how their experience was? Was there a large number of change orders that pushed the cost of the project above your original bid? If so, maybe use them as a reference if someone mentions they are getting a bid from xyz corp but it is much lower.

i have heard this twice this year. one was just a couple months ago on a custom new construction and the other was an addition and remodel.
the remodel HO was a lady that managed commercial real estate. there were red flags all over that one so when she asked if we could sharpen out pencil to match another guys price, we said we were not interested in the job any longer. she was actually pissed that we didnt want her work.
it turned out nice looking, but not any where near what our drawings showed.

Yeah wth is with some homeowners?
Give them a price, they try to grind you, you walk away, then they treat you like you are an ungrateful lowlife?
I just gave you the price, If you want to dicker, I don't want your business.
If I sense they are shopping for the lowest price,only I walk. I don't need the misery of a cheapskate client..

This is an awesome thread, it really hits home. I dont build new but I feel the eact same way for all my related work. It is so easy to say I am better and take the high road but how long can you be idle? You cant just work once in a while when it suits your morals.
Very tough problem especially for guys like us who come hear to be better all the time when we could be doing something else with our time.

I wanted to do the a number of times but didnt have it in me to follow up.

I don't work for fun, I work for money. If you want to build perfect homes for free go work for habitat for humanity until you starve. Everything else is just complaining about having to adapt to a changing marketplace.

This is probably the biggest challenge "high end" contractors face.
First, let's establish that everyone and their grandmother thinks/believes they are the bee's knees of delivering quality and superlative service. Few things make me as sick as when I talk to a tradesman, listen to them spout off about quality, then get a chance to see their actual work/attitude.
I've probably NEVER hired a tradesman that didn't think he was God's gift to __________. Less than 5% could actually deliver what you would call master craftsmanship. So if after 20, 30 years of doing just ONE thing...if only 5% actually qualify as MASTER craftsman...that's sad, but also the reality.
So right there, we have a BIG objection to overcome.
"WHAT MAKES YOU SO MUCH BETTER?"
On the client side, the great majority of consumers ASSUME they should have access to that 5% regardless of what they pay. They assume great service and master craftsmanship on every transaction. "Industry standard" leaves them unsatisfied, well if you know anything about "industry standard" then you know that almost half of the contractors out there can't meet it and in reality very very few can exceed it.
Somebody brought up the automobile industry metaphor.
In keeping with that, let's look at it this way. When you think "high end" what do you think? Most likely:
-Lamborghini
-Ferrari
-Porsche
-Aston Martin
-Bentley
-Rolly Royce
What percentage of the population owns one of the aforementioned?
I would dare say LESS than 1%.
These names are now synomymous with "high performance", "high end". What's one of the first things most people would say if they won the lottery? "I'm gon buy me a Lamborghini" (example). When in fact, less than 1% of the population actually know WHAT a Lamborhini IS. WHY it's such a performance vehicle. And that's 1% may not even be the majority of the people that actually own one.
And Lamborghini didn't become synonymous with performance over night. It was created in the 60's, competed against other high performance vehicles in the market, they INVENTED something new (a revolutionary redesigned engine that never existed before) , gained notoriety, went bankrupt, got bought by Chrysler, things got worse, got sold to Audi, things got better and today they roll out 2 or 3 thousand cars a year.
In a world with 6.5 billion people, that's a factor less than .0000005 of production to total population. Close to 100,000,000 cars are produced every year. That's still only .00002% of the market share.
You could take Prada as another example. They make great shoes (i.e.), no doubt the quality is some of the best in the world + their designs are revolutionary. How many people own a pair? 1% would be overshooting it.
So:
A) We have to accept that our market is actually a lot smaller than we suppose.
B) Anywhere in between middle and top rung is VERY convoluted and confusing, requiring mass consumer intelligence. Which is rare and lacking.
What that OTHER builder (the one that said he'll do it for almost $400k cheaper) has figured out, is that you can use consumer UN-intelligence to your favour. You PACKAGE the "quality", sell the IMAGE, get yourself established in that "Middle to top rung" segment of the market place, then cut your costs every which way you can, cut some acceptable corners and bid your competitors out of the price. The client will never be the wiser.
What have most builders done?
They threw in stainless steel appliances, granite counters, hardwood floors, crown moulding. 20 years ago these were all HIGH END, custom upgrades to builder homes. Today, they are par for the course. But what the builders learned, is that if you PACKAGE the product properly, very few will pick apart the inner working components to decipher what is what.
In my opinion, the middle to top rung segment is dominated by those that understand this principle.
And before you think "THERE'S NO ROOM FOR ME TO REPACKAGE THIS BID". Look again.
One of the most important thing I learned when I started playing the "commercial/industrial" game is some of the tricks that estimators use in competitive bidding. It would blow your mind away. Suppliers play a big part in the equation. I've seen FAIR WAGE projects get underbid by 10%, 20% and awarded to those bidders. Figure that one out

no longer is it enough to be just a superb craftsman,actually maybe it never was

We have the same issue constantly. We have very accurate scopes and bids, with ALL of the real costs included. We use the best subs and materials, products, ect. I

[QUOTE=jawtrs]We have the same issue constantly. We have very accurate scopes and bids, with ALL of the real costs included. We use the best subs and materials, products, ect. I[/QUOTE
Ill finish this later, my smart phone is acting dumb. JAW

This all stems from amount of job losses in the US and lack of respect the industry commands. Thats why its hard to sell the quality of our efforts.

There is no real education on installing techniques other than the person whom you've worked for. Even when people move on they are faced with a bombardment of untested new products to experiment with. Even those that know alot are thrown weird curveballs on jobs with unproven products. If you have poor ethics and your a slob, doing the same thing for many years doesnt make you any better.
Its even worse now because so many guys think they can do everything on the job the work suffers further. Too many treat the construction field as just nailing wood and labor.

Someone posted a video here a while back on the navy building a home. Not only was this a real skill that took a couple of weeks by hand with little power tools. They were framers, plasterers were skilled and we know how good the tilers were. We remodel baths only because their dated. Most of those mortar bed tile jobs could last another decade. We want to build homes that last but the consumer dont. This last decade of house flipping killed all that was good in our industry. We now have to reverse the ill effects of these homes being pounded out in days rather than weeks. Greedy home builders that beat down subs created the perfect environment for Low cost immigration labor. They drove out the real framers, roofer, drywallers and flooring guys with in the industry so they are forced to do many things to make a living. Lets not forget how many working proffessional have had careers ousted so they turn to our industry.

There are guys on this board that are only good because they have a lifetime of history under there belts. The old saying is still true, "If I only knew then what I know now". Knowing how to do many things is wonderful but we never stop learning and specialist is a specialist.

The model I am now working on is to give the customer an option for a "dry in" price.
We have a large home builder who advertises on TV that they build for $73 a sq/ft on your lot.
Now...we all know that you can but a full size pickup for less then 16k, and the same truck with options is 26, or even 36k. Homebuilding is the same, essentially.
But instead of beating myself to death to guesstimate every anticipated desire, or trim level, now, I start with the shell of the home,dried in, and offer the customer the opportunity to complete the home on their own. I can give a firm price to dry in, without changes, and the customer feels they are saving a lot of money, and accepting the headaches that go with trim out.

That's true, the problem is that the competition is managing to convince the customer that what they are selling is actually a Lexus, and they are able to do it because they don't share your standard of honesty.
You are competing on a playing field that is sloped in your opponent's favour. Unless you are prepared to lower your standards you will never win against these people because construction is NOT the same as cars. People can easily determine a Mercedes when they see one, and so, more to the point, can their friends and neighbours, but they CANNOT tell the difference between what you are offering and what the competition is offering, and, as you have found, there is no way to explain it to them, they simply cannot hear it.

That is how I had my home buillt. The contractor gave me a price with just the bare studs inside. He did figure the siding and windows - both of which I chose. The exterior was complete. That gave us a starting point. He seemed so honest and to the point that I did not get competing bids.
Once that price was established, it was an easy process to pick everything else out and just add it to the shell. My home is VERY small, however. I do not see a home as a status symbol or an investment. It is a shelter and something to get paid off so you don't have a payment or rent.

That's a true and great statement....I like that theory

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  • Allowed file types: zip rar.