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Using Design to Create a Profit Center

This week’s Wrap-up is the first in a series about creating or enhancing a design-then-build company. I’ll show you why design-then-build is one of the best ways to build a profitable remodeling company, and how to manage the design process. 

 

Tile DesignWhy You Should Add Design To Your Remodeling Business

In my experience, adding design to your existing remodeling business is the best and quickest way to create more, better, and more profitable jobs than any other remodeling process out there.

With design-then-build you can enhance the perceived value of the project, suggest and incorporate custom add-ons, as well as sell your projects for a higher price. 

You get to know the client and build a solid relationship before the project starts. And you are building one of the most important factors in being a successful contractor – you are building trust. When you are trusted, everything goes smoother. You are forgiven for small mistakes or oversights. You are paid on time and without question. They are part of your team, and feel a part of the entire process. In short, you are their consultant and are watching their back, and their budget, at all times.

 

What Is Design-Then-Build? 

Design-then-build, or design-build, is simply the process of designing your prospective client’s project, and then building it. It has numerous advantages to having design done by a third party, and then your prospective client bringing the design to you (and others) to bid. 

There’s no one right way to handle design. It depends on your experience, your sales ability, the market you are selling to, and last but not least, your prospective client. 

If you do in-house design, or even if you hire a residential designer or architect to design the project, you are acting as a consultant to your client during the entire process. Therefore you are in the loop and know all the project details, and your client’s likes and dislikes. You can steer them towards design features and products that are to your mutual advantage, and keep them away from those that can create immediate or future problems.

Let’s examine how to go about the design process and maintain control of the design during the process.

 

First Step – The Initial Consultation

There are many facets to being a good design-then-build firm. 

Let’s start with the first step:

1.The initial consultation – the first conversation and rough price. This is their first hurdle they have to jump over. (Notice I said, “they”. You are always choosing your client, although they think they are choosing you). You pre-qualified them over the phone and found them worthy of an initial consultation. At this meeting you’ll assess the project and give them a ball park cost of the job. 

*Always keep in mind that you are not going after the project. You main focus must be on one thing only – selling the design agreement. 

 

How To Charge For Design

If they are okay with your rough price for the project, then price the design to them and have them sign a Design Retainer Agreement. For large projects, such as a whole house renovation, $10,000 to $15,000 might be a reasonable amount to charge. I have sold kitchen designs for as high as $9,000 and as low as $1,500. Pricing might be a percentage of your rough price (approximately 2-5%), a set standard fee for a kitchen, bath, master suite, etc., or it could just be a price that you make up on the spot. The latter is the method I mostly used. I knew basically how long it would take, I have a lot of design experience under my belt, and I knew the likelihood of the price being acceptable to a particular client. My focus was to make the design fee one that they were comfortable with.

The main point here is not the amount of the design fee. It is to have them invest time and money in your design. Once they sign the design agreement it is unlikely that they will back out of the project if you play your cards right. In the many years I ran a design-then-build business, I only had one client back out, and that was due to some personal difficulties they had, and they were unable to build at that time. Oh, and I did have one client steal my design, but I’ll tell you later how I stopped that. 

If you already have design built into your system, how do you charge for it? Do you give the drawings away and hope you get the job? Do you give them all or half their design fee back when you get the job? Or do you hold onto the design until a contract is signed?

Leave a comment or a question and I’ll include some answers in next week’s Wrap-up.

In next week’s Wrap-up, I’ll go over the next step – the various ways to design a project, what to include, and what to avoid. 

 

Is Design-Then-Build For You?

I hope this first part in the design-then-build series has whetted your appetite for adding design to your business. If you already are a design-build firm, I hope you picked up a few tidbits that will improve your process.

I understand that there are many types of remodelers out there, using a variety of methods to sell their goods. All I can say is that design-then-build was a major component of our business, and was the main reason we could make a very good profit on each job, always stay in the black, and had a very loyal customer base. In addition to that, I just loved doing it. There’s nothing quite like designing a great looking kitchen, or bathroom, or a home theater, then building it. You know exactly how to price it, and how to build it. There should be very few obstacles in your pathway to a hassle-free, profitable project. 

 

Your Action Item

I hope you have another wonderful week. Take a few minutes to research how you might add design to your firm. Will you do the design yourself or hire an outside residential designer or architect? Study the various CAD programs you might consider using. 

I’ll go over more of this in future Weekly Wrap-Ups. Remember to leave your questions in the comment area below.

Wishing you the best of fortune, Randall

Randall S Soules
Remodeling coach, adviser, and educator
Randall@scientificremodelingsystem.com

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This article was written by Randall Soules, creator of the Scientific Remodeling System, showing you easier ways to advance your business, raise your profits, and improve your life, through the use of superior  remodeling processes. If you would like to learn more about this eCourse, click here.

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