Range of Options
McCadden, former education director for DreamMaker Bath & Kitchen by Worldwide says that some of the company’s franchisees found that showing the same bathroom footprint at the three different price points helped customers visualize the final product. Then the franchisee could say, “I can do a project for you from $14,000 to $25,000. Let me give you some appreciation of what you get at what price-point.” McCadden says that this helps the homeowner feel more in control of their project. They know, “I am the one adding the shower door or brushed nickel. I am the one changing the price.” However, even with upgrades or changes, McCadden cautions remodelers to keep selections simple. “There’s no sense in having a package and choosing from 300 items,” he points out.
Van Houten displays the Bath in a Box starter package in his showroom. The standard bath includes a vinyl floor, vanity cabinet, laminate counter, tub, toilet, and towel bars. “We narrowed down the selection to negotiate better prices,” he says. Next to the standard display is a display with upgraded features including a tile floor, granite countertop, and brushed-nickel faucets.
Inevitably, Van Houten finds a few square feet of rotted subfloor in a bathroom, so he includes subfloor repair in the bath package price. The standard project can be completed in five days. “If [the homeowner] makes a change beforehand, we can still do it in five days,” Van Houten says. Otherwise, he provides a change order stating how much time and cost the change will add to the project. “Once we start, I don’t like change orders,” he says. “We try to get in and get out.”
Most of Van Houten’s clients choose to upgrade from the basic laminate countertop to cultured marble or solid surfacing, or to upgrade from a standard birch vanity to maple or cherry. If they upgrade to tile, the job can’t be completed in five days.
Hamilton is working with an interior designer to create traditional, transitional, and contemporary packages, and plans to have several price points within each category. He’ll use his existing custom estimating software to track pricing and expects prices across categories to run from $12,000 to $20,000. The contemporary package, for example, will have a quartz countertop, cabinets with a simple door style and limited finishes, and chrome or brushed-nickel fittings. The interior designer is assembling images of bathrooms to help customers identify their style and will also work with the clients on selections.
Ovnicek’s basic $5,500 package includes removal and disposal of the existing bath fixtures, a new vanity, countertop, mirrored medicine cabinet, faucet, toilet, acrylic tub and tub surround, one new light fixture and one new fan, and a vinyl floor. He expects people to upgrade by adding a shower and/or shower door and to ask for a tile surround, which should lead to an average price of $6,200.
McCadden says that tight control and pre-staging of products will help remodelers maintain good markup with their packages. He advises remodelers to start with the core of work that will be the same across all bathrooms. “Gutting, permits, re-framing for a new tub or shower — let’s call that base work. No matter what finishes I put in, by code, I still have to put in a 20-amp dedicated circuit and wiring for a fan, or plywood underlayment,” he explains. Then, add the finish products to identify the price-point.
McCadden says that choosing the right products for the packages will help remodelers control the project and the price. “You can buy 30 cases of tile at a 30% discount versus buying one bathroom’s worth of tile. If it’s all from the same lot, you can reuse the 14 extra cases on the next job,” he says.
Remodelers should also know the impact of any changes to the package. “If someone wants multiple showerheads, you might need to go to a 2-inch drain line,” McCadden says. “A remodeler who does the work knows that, but if someone else is selling the package, they might not know that.” Sales training is key.
Miller wants to develop sample boards for his eight packages. He currently completes 50 bathrooms per year and can create an accurate quote for these small projects in about 30 minutes. Since, with the packages, he expects to double the number of projects he does, he is reviewing CompuTool software to help him automate the system. “We’re trying to get it so 80% to 90% of the exceptions can be captured in an expedient manner,” he says. The program allows users to import pictures, which will also be helpful for clients.
Showing It Off
McCadden points out that showrooms allow clients to view the packages in person. “A display is very important,” Van Houten agrees. It has far more impact “[than] just looking at a picture of a shower or one picture of a vanity.” He does have a book of product photos that he shows to customers when he visits their home, but he does not leave it with them.
Hamilton hopes that his customers will want to make all selections in the company’s showroom. “If I had to go to seven showrooms with them, I couldn’t make any money,” he says.
But for remodelers who do not have a showroom, McCadden suggests taking a photo of a bathroom package project, creating a bulleted list of products, and adding links to the products on your website. “Use a special password for your prospects to see the package on your site,” McCadden advises, “but turn it on and off so they can only view it for 15 days. That way, you can track how many times they went to the site and they can’t show it to another contractor.”
A Team Effort
It’s worth taking the time to work with your plumbers, electricians, and suppliers, Van Houten says, because they have to buy in to the process. Gentry Plumbing Supply promised to maintain a stock of the plumbing products that Van Houten selected for his company’s bath packages. “We chose what he can get a good buy on and what he stocks,” the remodeler says. “We do not keep any products in the warehouse. We rely on vendors to have them ready.”
He provided his electrician, Roper Electric, with a list of standard items for a package bath, including new GFCI, light switches, and a fan/light. “They do not have to look at every job or quote the job,” Van Houten says. “We send them a purchase order with a date, and I work on getting supplies there.” And it’s important to use licensed professionals who provide a quality installation. “I believe that after 25 years, that is why I am still in business,” Van Houten says.
For Jackson, coordinating multiple vendors for these small baths can be difficult. “The trick is to have one really skilled guy who can do almost everything,” he says, “and then use one or two specialty trades.” Jackson buys most items directly, and when he was putting together the bath packages, he brought in a glass supplier to provide shower doors. “Anytime you think about your processes, it helps — we’re learning how to buy smarter,” Jackson says.
Hamilton talked to his suppliers both to research their most popular products and to negotiate lower prices. He chose to use Kohler faucets. “We wanted to find [a brand] that homeowners would recognize,” he says. He worked out an agreement with his subcontractors on scheduling their time. Jackson Design + Remodeling does not begin the actual work until all the permits are in and the products are on site because, Jackson says, “It may take us three to four weeks to get everything in and to make sure it’s all the right quantities and colors.”
For Miller, using the same products increases productivity. “If the guys are working with the same products and the same type of installation 60% to 80% of the time, it makes the installation process all the more efficient,” he points out.
Capturing the Market
All the remodelers we spoke with for this article agree that it’s best to speak to your suppliers before creating packages so they can advise you on the products they keep in stock and you can negotiate pricing. Similarly, remodelers should check with subcontractors to make sure they can work with the package’s accelerated production schedule.
Hamilton believes there is a real need in the market for this type of specialty. “It’s hard for homeowners who just want to remodel a bath to get all the information in one place,” he says. “Most remodelers are not geared up for it, and smaller contractors do not have the knowledge or experience to help clients make selections. We’re going to take advantage of a niche market.” And he hopes that remodelers will refer his company. Also, now that he has chosen to concentrate on baths, Hamilton expects that, as his company completes more projects, efficiency will increase allowing him to both lower customer cost and increase the company’s bottom line.
McCadden predicts more specialization, even within the bath area. “Contractors will specialize and market to people they are choosing in advance as their customer type,” he says. Bath packages are an example of that. “If you advertise that you are doing packages, you have used marketing to pre-qualify clients.” —Nina Patel, senior editor, REMODELING.
This is a longer version of an article that appeared in the May 2010 issue of REMODELING.