Remodeling Sales

A business owner in the United Kingdom asked a question that illustrates how remodeling sales challenges are the same regardless of your location.

“Dear Michael,

A great big hello from the team.

I hope you, Devon and your family are keeping safe and well.

I’ve devoured Markup & Profit: A Contractor’s Guide (about six times) and am currently listening to your Profitable Sales audiobook. I listen in my work van every day and have learned so much. I’m enjoying implementing your advice on my sales calls and have converted to wearing a shirt and tie!

Having said that, I hope I could seek your wisdom on my current situation.

Last week, I visited a husband and wife who’re set to build a new home designed by a local architect. For our small business, this is a big job. It’s a large house, around the £800 thousand mark. However, I won’t be certain of price until my quantity surveyor has done the calculations.

I met the clients, spent a couple of hours with them, went into detail about their project, asked lots of questions, including what do you want to do? When do you want to do it? What you look for in a contractor? The clients revealed they were seeking a quote from ourselves and another local contractor. But when the discussion inevitably turned to budget and what they’re looking to invest to build the house, they skirted around the issue.

I explained due to the size of their build, we want to provide a firm price, so there are no surprises down the track. Although we can include allowances for some items, the selections they make determine the cost of the project and this will involve several meetings between ourselves and engaging our subcontractors and suppliers to provide quotes.

I also explained that without knowing their budget, this is what normally happens: we’ll put together an estimate, only to hear the price is too high, or in the worst case, never hear from a client again. So, time, energy and resources are wasted trying to hit a target we can’t see. Knowing their budget makes the estimating process run smoothly and in the event our quantity surveyor calculates a price that’s outside their budget, we can immediately explore alternatives.

I gave them time to think about a budget and to let me know. This morning, I received this email:

‘With regards to budget cost, we don’t really want to state a figure to you because we are quite flexible in terms of budget and would rather have the right desired product. For example if a preliminary sum of £8k was allowed for the kitchen and we chose one at £14k we would just sign off the extra at the time. And likewise with electrics and bathrooms etc. If all the trades were broken down and we wanted to put in fancy light switches etc we realise this would be an extra. We hope this makes sense. Kind regards’

How would you respond? Would you try a different tact, ie: helping them out by providing ranges for their build – medium, high and low?

In Profitable Sales, you speak extensively about the importance of knowing a client’s budget in order to design a project that fits their vision. However, our challenge is… if a house has already been designed by an architect and we simply receive the plans, how do you convince a customer to divulge their budget to get the job built?

Your thoughts would be greatly appreciated.”

That sounds like a great sales presentation. This young man is focusing on his business skills and is willing to put in the time and effort to make his business successful.

You need their budget even if they already have plans. For all you know, the person who created the plans didn’t know the budget either and the design might be more than the owner can afford.

As the one who will build the job, it’s your job to give them an idea of what the project will cost. Offer the three price ranges, medium, high, and low, and ask them to pick the range that best suits them. On a project like this, it’s probably smart to set a callback to give you time to come up with a rough guesstimate. You need to present ranges that are within 5-10% of what the final project could be based on the current design. “I need a few days, is it okay if I return on Tuesday? I can let you know then the price ranges for a project like this and you can select the range that best suits the investment you want to make.”

That gives you time to rough out what you think the project might run. You’re not creating a complete estimate, you’re using your experience and best guess to come up with the possible ranges. When you return, present the three ranges and don’t say another word until they respond. If they won’t select a range, ask them to call you after they set their budget. Excuse yourself and leave. You won’t be able to convince them otherwise.

Too many salespeople fall into the trap of putting the estimate together, putting in a lot of time and energy to do for free what they think it takes to be selected. They justify this approach by saying they don’t want to alienate the potential client. I did the same thing when I was getting started, and guess what? It never resulted in a sale. That’s when I learned to set the parameters under which I was willing to work and stick to them like glue. I never regretted that decision.

Every client knows what they want to spend on their project regardless of what they say. They might tell you that they’re flexible, but that’s only to avoid answering the question. They have a budget, and you’ll know you’ve exceeded that budget when you create the estimate and hear that your price is too high. That’s when you realize you wasted time on a project that probably won’t be built.

A good salesperson takes charge of the sales call, getting the four basic questions answered and moving on to either a design agreement or letter of intent. You’ll make on average 1 sale in every 3 leads. If your sales ratio is 1 in 5, or 1 in 6, you need to improve your sales skills. If you are selling every job, or every other job, you’re selling on price and your price is probably too low.

We talk about all this in detail in Profitable Sales; A Contractor’s Guide. Protect your time; get comfortable with walking away and moving on to the next job when it’s necessary. You won’t make every sale.


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Mike
November 1, 2020 6:36 am

I have absorbed your Markup and Profit book, and often refer to it as a refresher. I just ordered Profitable Sales and eagerly waiting delivery to dive into it. While I try to implement the basics you have explained in your articles, my biggest challenge is setting the budget ranges. November will be my 2nd year in business. Previously, I have always been an employee not privy to project costs (or never inquiring on costs), so I only have previous projects (kitchen/bathrooms) of my own to use as a baseline to budget from; and those I likely didn’t price accurately.… Read more »

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