Educate, Educate, Educate Regardless of when a remodeler chooses to talk about pricing, educating the homeowner should always be a goal. Each client comes with a particular set of challenges, but there are some general similarities. Acheron Construction, for instance, constantly fights the battle of the square foot. “The real estate market here in Dallas is driven by the square foot. So people know their home is valued at $145 per square foot. They will take the size of an addition and calculate the footage and thus the price,” senior partner Alex Dahlgren says. “There is no basis in reality.”
So Dahlgren advises that such clients immediately quit thinking in terms of square footage. Kitchens and baths, he notes, typically cost more per square foot than any other room in the house. Instead, he tells them that a good rule of thumb for avoiding overbuilding or underbuilding is to spend between 15% and 18% of the home’s value on remodeling a kitchen and between 10% and 12% on the master bath. “That gets us to a starting conversation.”
Classic Homeworks also avoids talking about cost per square foot, except in the case of additions. Giving rough estimates isn’t all that hard says Pratt, since “most jobs are for fairly similar work.” He tells clients that kitchens, for example, will tend to be in the $55,000 to $85,000 range. If clients say they want to land at the lower end of that range, Classic Homeworks will talk about reducing the project scope or using fewer high-end materials. “Or we might say that we may not be the right company for [that client],” Pratt says.
The next step is the design agreement —if it’s worth getting to. “We make all kinds of judgments to decide that,” Pratt says. “We charge for our design, and we don’t do any work without the design agreement. It saves us from wasting our time with someone who doesn’t have the budget.” Included in the design agreement are a short description of the scope of work and a price range. However, the agreement does not commit a client to going ahead with the project.
That firm stance — telling clients they need to cut back in one way or another and then being willing to walk away from a potential job — saves remodelers time, frustration, and money. Some clients simply aren’t worth taking on. “If they ask, ‘Can you lower the price?’ we say, ‘Sure, what do you want to eliminate?’” Bellamy says. “Today, there’s no room to just lop off $2,000. The price is what it is. We’ve itemized every line. We know what our material costs are.”
Even if clients initially hesitate at a price, they may eventually sign on. “It may take their talking to two or three other remodelers to have that [reality] sink in,” says Jason Larson, president of Lars Construction in La Mesa, Calif. A number of clients suffering from sticker shock have come back to Larson after doing just that. “They come back and tell us that we’re the most professional and informative.”
Given that most people don’t want to tell remodelers what budget they anticipate and, at the same time, they somehow expect their entire wish list to cost a mere $10,000, Larson softens the blow by asking for two budgets: one they’re comfortable with and a larger, “not to exceed” budget. “That gives me a range to hit within,” Larson says. “It really does work.” Nine times out of 10, he says, if Lars Construction comes up with a design within that range, it gets the job.