Let’s say the job involves replacing a 30-square roof. Here’s the typical procedure: Contractor hands the homeowner a proposal that reads “Replace roof.” There’s a price, say $10,500.
Of course many things go into re-shingling a roof besides shingles. Nails, flashing, caulk, underlayment; “replace roof” is a package consisting of products and labor. But the average contractor or home improvement salesperson doesn’t want to open up the package to show the homeowner what’s inside—for a few reasons. First, the salesperson is in a hurry, and breaking out the job is work. Why make estimating and selling harder? Especially since (the salesperson thinks) the homeowner doesn’t know what any of it is, or care anyway.
A second reason is that the sales rep doesn’t want the homeowner to know what goes into the job, or how much it costs, thinking that the less homeowners know, the easier it is for the contractor to hide an estimating error or cover an installation mistake.
Third reason: If you work for a big company, they don’t want you to break out prices. They’ve got one product to sell and the philosophy is that this is the price, take it or leave it. (Though if you buy tonight, we can reduce the price by …)
Home Improvement Exceptionalism
I’ve sat through presentations at trade shows where the speaker explains why and how contractors can hide line-item pricing. In what other industry could you get away with this? Imagine if you had an accident and took your car into an auto-body shop and the owner looked your car over, went into his office, came out and handed you an estimate that said: “Fix car, $2,343.” You’d hand it right back and demand to know exactly what work was going to be done, right? Yet contractors expect homeowners to swallow the bundled price of their roofing, siding, window, or whatever home improvement job, no questions asked.
The beauty of it is that this widespread practice can help your company get jobs by allowing you to quickly and easily differentiate your business during the sales process. It’s instant positioning. For instance, we started breaking out pricing on our estimates some time back. We price out everything that goes into that job. Not, “Ten Windows, $8,494,” but what each window costs, plus low-E coating, argon, grids, full-screens (vs. half-screens), caulk, capping, sill replacement (if necessary), all of it. The customer knows exactly what he’s getting.
So let’s say we come up against the guy who’s going to re-shingle that 30-square roof for $10,500, at $350 a square. We’re selling an Atlas shingle for $505 a square. Not a chance, right? Wrong. First off, we measure the roof right in front of customers, using Pictometry. We show them the footprint in real time. We add the pitch and multiply pitch times square footage plus 5 percent waste. We explain that that’s how many squares the customer will be paying for. We include everything—tearoff, ice-and-water shield, drip edge, cost of nails, flashing, caulk, labor—in a price and we break out the price, piece by piece, right down to cost of the Dumpster.
So in that example, we’re coming in at $15,150 and the homeowners says: “Hey, I got a guy who’ll do it for $10,000 and change.”
Tough spot, hmmm? Actually it’s right where you want to be. Here’s the response: “That’s a great price, but what’s he going to do?” The homeowner might say: “Replace the roof, just like you would.” Response: “Really? How about if we sit down and compare his proposal with our company’s proposal.” And when we do, we point to where it says, “Replace roof,” and ask the homeowner if he knows what that contractor is actually going to do? What kind of shingles will he use? What other components? Let’s say he skimps on fasteners and the roof nails are not the proper nails. Soon enough the nail heads pop and shingles tear away. We see roofing jobs all the time without starter strip, ice-and-water, or drip edge. Why buy it and pay to install it if the homeowner doesn’t know the difference anyway?
Quality vs. Cost
Some companies won’t do this because they think the homeowner is going to take your price and shop it. No doubt there are plenty of homeowners out there who haven’t learned their lesson yet. When you’re doing something for less money, you have to cut corners. And cutting corners means problems down the road. What’s a great deal on a roof worth if you have to replace it again in five years? If you’re not cutting corners, if you’re doing a quality job, and asking people to pay for it, why not let them know what they’re getting for their money? By doing so, your value only increases in their eyes.
By giving homeowners all the information you can in your proposal, you'll set your company apart from the competition