Home improvement is different from other businesses. So different, it’s almost a parallel universe. There’s what happens in home improvement and what happens in the real world.
In the real world of business, for example, your cost of goods sold—labor, materials, insurance, personnel, fixed overhead, plus a fair and reasonable profit—are all included in the price of the product sitting on a store shelf. Take it or leave it.
In selling a home improvement project, the price, to a homeowner, can seem like a number pulled out of a hat. Once it leaves the hat, it’s often subject to negotiation between salesperson and prospect so the salesperson can convince the homeowner he or she is getting a deal.
Five Proposals, Five Prices
Even without that back and forth on price, if you simply hand the prospect your proposal, the whole concept of what that homeowner is getting for what he or she is paying remains unclear.
Let’s say they’re soliciting proposals for a window replacement job involving 15 openings. They contact five companies. How likely is it that all five proposals come in at the same price?
Not at all likely. As the homeowner shuffles through the pile, she sees a bid for $11,000 and change, another for $22,000 and change, and the rest somewhere in between.
There’s only one other industry that I can think of where the price for the same service is all over the place. That’s healthcare. For example, the cost of an MRI can vary by hundreds, or even thousands, of dollars. The average nationwide cost is $2,600. So when you’re sent for an MRI, it's difficult to know for certain how much you or your insurance company will be charged.
This is among the reasons why a lot of homeowners put off home improvement projects the way they sidestep going to the doctor. They’re afraid they’ll be somehow steered into paying a lot more for something than is fair.
So they don’t act until they have to, which puts them at the mercy of that small minority of contractors prepared to take advantage of their ignorance.
Fair And Square
You could chalk this price discrepancy up to the fact that every project is a little different. Some, of course, are vastly different. Many contain specific problems that, once encountered, have to be managed.
Maybe the house has moved, which makes setting the windows challenging. Maybe that roof-to-chimney connection needs to be re-flashed. Maybe the chimney itself has deteriorated and needs to be repointed.
But what a homeowner actually wants to know is: 1) what’s wrong, 2) how bad it is, 3) what it will cost to make it right, and 4) when you can start the work.
Bear in mind that new windows or a new roof are something most homeowners have probably never purchased before, and likely won’t be buying again anytime soon. They might make this purchase once or twice in their lives.
That first unreturned phone call—a common practice in this industry—signals that getting the project underway probably won’t be easy and the experience certainly not enjoyable.
Smoke And Mirrors
What also confuses homeowners is that some home improvement companies market their services as if the projects they specialize in were just so many products on a retail store shelf. Typically, they have a commodity product—vinyl windows, for instance—and set out to get the consumer’s attention by being the cheapest guys in town.
“Buy three windows, get one free!”
When three or more companies vie to outdo each other with offers like that, the market becomes a bloodbath and we’re down to, “Buy one window, get three free!”
These organizations are so desperate to pluck a customer out of the buying cycle that they make wild offers just to get a salesman in the house. Once there, the salesperson turns up the pressure in all the ways he’s been taught. Hey, if they don’t buy, he doesn’t get paid.
Straight commission is the way almost every home improvement salesperson today is compensated, another often self-defeating practice.
Have you ever heard salespeople brag? They talk about their cars, their sales, and their close rate. They’re far less expansive on topics such as how honest they are, how ethically they behaved, or how well they took care of a customer.
How To Be Different
Consumers know a lot more about how the home improvement industry works than they did 15 years ago, but they still don’t know enough. When it comes to crazy marketing offers and high-pressure sales tactics, many are still willing to go along for the ride.
But say you don’t want to join in that pricing free for all. There are other ways to position your company relative to others.
Product, for instance. You see companies marketing the fact that they sell a super glass package, or a triple-pane window with krypton, fiberglass reinforcement, and steel in the frame.
Some will tell homeowners they install a shingle unique to the market (without mentioning that the only thing unique about that shingle is the fact that they’ve slapped their name on it). They believe that product is the primary reason homeowners will want to do business with them.
Contracting’s Golden Rule
This misses the point that it’s not a product that homeowner is buying, but you. They call a home improvement contractor because they’re looking for someone who can solve a problem. They want to trust that contractor. Trust translates to not only doing a good job, but also doing what you say you’re going to do and treating people with the courtesy and respect that are standard in most business operations.
The most certain way to be different is to make it your business to figure out and solve their problem while being completely fair and honest in the process.
Here's how we sell: The price is the price, here’s how we got to the price, and this is what we’re going to do for the price. For instance, if during a window installation you need new interior molding, we do that for a set charge, from a price list you can see.
Our mission is simple: to deliver accurate information and excellent service so as to make this experience as easy as it can be for the client, while also realizing a fair and reasonable profit for ourselves.
Want to have a profitable home improvement business that’s here for the long haul? Build it on honesty. You don’t have to be the cheapest guy out there, and sometimes you may end being the most expensive.
That price will make sense to the smart homeowner if you can explain how you got to it. If your workmanship is good, your reputation is solid, and you deliver on all your promises, you’ll make money.