As the housing market tanked, builders started stripping their homes down to the bare essentials. They did this in an effort to make their homes more affordable and to not be underpriced by another builder.
Even now as the market is improving, they are still building homes about as bare as a lap dancer. This trend makes it harder for building product manufacturers to sell their upgraded, more profitable products to builders.
How can a building materials company help put some profitable clothes back on the builder?
Like a Victoria’s Secret catalog, builders attract customers with the bare essentials and its attractive price. By the time the contract is signed, the builder is planning on covering up that home with a full wardrobe, including a mink coat. The price for the home may be $350,000 but the builder is planning on selling it for $500,000 with upgrades. The challenge is how do you become one of those upgrades.
There are two steps to succeeding with today’s pole dancing builders.
1. Don’t fight it, embrace it. Help them to lower their costs with your builder grade products. If you aren’t the brand supplying the bare essentials, you won’t be the one who’s allowed to sell the step-up products.
While lowering your prices or offering a bigger rebate are obvious solutions, they are costly to you. You should see if you can’t be more creative in lowering the builder’s costs. There are costs associated with installation, delivery and other items. If your competitor is dropping the ball, it’s costing the builder. Can you help lower any of these? It may be less painful to you and help the builder just as much as a price cut (in fact, it makes you look more innovative and creative).
2. Make it easy for the builder to sell your upgrades and make it easy for the consumer to choose your upgrades. The first thing you have to do, whether you are a product that can be seen or one that is hidden, is to be an upgrade that the builder features.
Even if he features it, you are still one of many optional upgrades that the home buyer can choose. You have to move from “You don’t want that upgrade” to “That’s an OK upgrade” to “That’s a great upgrade.”
To get on the upgrade list you need the OK of construction management. Time is money and the construction manager will resist anything that they believe will slow down the process.
You should also know the profit margin that the builder should be able to get, for your products, compared to other upgrades. Finally you need to train the design center staff or whoever leads the homebuyer through the selection. You need to show them why homebuyers will want this and why it is an easy upgrade to sell.
Follow these two steps if you want to succeed by helping builders to cover up in profitable upgrades.