Builders Roadmap: Increase Margins & Prices in Competitive Markets
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This is NOT advice about reducing costs & overheads in competitive times. Rather, it’s strategic advice about how to fast track bigger profits in a competitive environment based on what successful home builders do.
In competitive times, and softer markets, most builders already know to reduce overheads, costs and look for opportunities to remove any surplus.
Instead, this article looks at strategic steps you can take to completely change the game.
They come from research interviews we did with builders and show how most builders are far more empowered to deal with competitive pricing than you realise.
| These issues (& more) will be discussed in greater detail in the free Builders Webinar: Correct Pricing? 6 Pricing Mistakes Builders Make. |
Let’s look at strategic pricing, rather than reactive pricing:
>>>Re-Think Your Marketing (Demand > Supply)
The laws of economics say that when demand exceeds supply, the price goes up.
So, why not re-think your marketing? Don’t sustain demand for a good workflow. Instead make it exceed what you can deliver.
You want demand for your services to exceed supply (to be ‘over-subscribed’).
That way you can increase your margins, comfortable that those who fall away as prospects would have been less profitable clients.
That then leaves you with A+ clients who are comfortable paying higher rates for your expertise.
You can then re-invest these better returns in your business to give your customers the best possible customer experience.
>>>Best Possible Customer Experience = Referral & Repeat Customers
Referral & repeat customers are less price sensitive because they already have a knowledge of how you work and want to engage you.
Importantly, they’re happy to pay more.
So, it’s important that you manage expectations, reduce surprises, communicate clearly, manage potential disputes and so much more for your existing clients.
Provide prospects with an information pack before you meet them so they know what to expect.
Customers who have a great experience with you not only return as customers and refer friends, they’re also make for great testimonials or case studies to help other prospects understand your expertise.
Getting your customers’ experience right will be a game changer.
In fact, builders tell us that when 50% of your business starts to come from referrals or repeat clients, that’s a tipping point for huge success.
>>>Work to be The Only Builder or Trusted Expert (Preferred Builder)
Being the clients only real choice moves you into Jedi territory.
But to do that, you need to implement series of steps clients take with you well before build stage.
Growing trust with clients is a process that you can create so that every client you deal with has experienced your expertise and trusts you by the time the project goes to tender.
When you achieve this clients are solely focussed on employing your firm. Anyone else they speak to is just making up the numbers.
To find out how, see Are You a Trusted Expert or Just Another Builder?
>>>Generalists Compete Against Everyone, Specialists Have a Niche of Expertise
Specialization (differentiation) allows builders to focus on a niche that they can proudly claim as their own.
You might be the first floor addition specialist, the passive house specialist, the inner-metro renovation specialist and more….
The point is that clients want a specific project done. So aligning your chosen speciality with their needs make YOU the stand out builder.
Clients are prepared to pay more for an expert who specialises in their project type.
>>>Ignore New Technology at Your Peril
Every day there seems to be a new software, new gadget, new game or new social media channel.
It can feel hard to keep up.
The easiest way is to do a google search for specific problems you face in your business.
For example, before ProCalc was released, builders struggled to accurately ball park client projects to qualify client budgets – meaning they wasted weeks estimating under-funded jobs.
Instead, Builders using ProCalc report saving 2 – 4 days per month avoiding tyre kickers (book a free ProCalc trial)
There are hundreds of software packages available to builders. Those who implement good software solutions enjoy huge productivity/profit increases.
>>>Qualify, Qualify, Qualify
Few activities will improve your margins as much as heavy qualification.
Taking on the wrong clients will cost you thousands of dollars and too much of your time.
Ask clients about their expectations, experiences, preferences, location, timeframes, project type, urgency, plan availability, willingness to pay for your time and their budgets. (Book a ProCalc free trial to test the budgets)
If you found this information helpful, we’ll be covering these topics and more in the Builders Webinar: Correct Pricing? 6 Pricing Mistakes Builders Make
You Might Also Like:
- Builders, Get Your Pricing Right Every-time – No More Under-Quoting
- Transform Your Building Business in 43 Mins (webinar)
- How (& Why) to Charge for First Client Meetings
- Take a Free Trial of ProCalc
- Stop All Free Client Meetings – Charge Upfront
- Want more tips like these? Attend the Webinar: Work Smarter, Not Harder
Richard Armstrong is a former registered builder who recently interviewed hundreds of experienced Australian builders to identify how they best manage clients, budgets and profitability.
