Wilkinson can afford to focus so much of his attention on each project because producing design work for other builders has evolved into a substantial profit center for the company: 37% of its total volume in 2006. Rob Adler, owner of Socha Builders, in Rumson, N.J., runs his operation similarly, building only about 10% of the projects he designs. Though most of his design work is done for other builders, the projects he builds himself benefit from a seamless transition from design to production. “If the same people are dealing with both, all of the issues that arise are handled more smoothly,” Adler says. “Since I design, my crews know to refer back to me, as opposed to someone else not as privy to the client’s wishes.”
A WAY OF DOING BUSINESS Regardless of what form it ultimately takes, the benefits of design/build are evident. Working together with homeowners to set a budget before any design work is begun allows the remodeler to design a project that is realistic in scope and is practical to build, rather than trying to tear apart and rework an existing plan to fit an unrealistic price range, or having to hammer a client with change orders to amend an impractical design.
“I want to know when I give that final number that all unforeseen elements are covered,” Petrucci says. “I don’t want to sell a job [at a fixed price] and then have $30K worth of add-ons.” A design/build approach allows you to track and manage a project’s costs from the very beginning, with total control over all of the elements.
In selling design/build, you are not simply selling a service to your clients, you’re selling a way of doing business. Rainey has found that clients are willing to pay for that kind of established quality. “Ninety percent of clients come to a design/build firm because they trust in their referrals and they trust the owner,” he says. “They come because they trust the face of the company and they know you’ll stand behind your work.”
And by selling the design/build experience, it’s possible to finally escape the bidding wars — plagued by lowballers who drive prices (and profits) way down — that frustrate so many professional remodelers.
By the time the design agreement is signed and the retainer collected (and before you’ve spent valuable time and resources on a project), the homeowner has essentially committed to your company. “Once we collect the retainer, we have a close rate over 75%,” Benvenuto says.
But for contractors unaccustomed to charging enough for design to even cover costs — let alone asking for a retainer — the leap can be a difficult one to make.
CHARGING FOR DESIGN When Tabor’s company first became design/build, he was offering design services free of charge. One of his first designs was a basement remodel for a prospect who eventually hired a lower-bidding contractor. A year later, Tabor got a call from the same prospect looking to do an addition. When the remodeler visited the site to give an estimate, he was stunned. “He gave me a tour of the basement I had designed for free,” Tabor recounts. “It was tough to keep my mouth shut.”
Asking a client to pay a substantial design fee can be a nerve-racking experience for those unused to doing so. For Tabor, it took that sobering experience to finally put things in perspective. “As soon as I have qualms about charging, I just remember that feeling of walking through my design that someone else built,” he says, “that feeling of getting burned. Now I have no problem charging.”
Giving away design services sets a precedent of entitlement that can spill into other areas of the project as well.