Most of the time, someone embarking on his or her first remodeling project won't know how much they will wind up paying in the end. This isn't just because of unexpected fees that might result from unknown structural damage or other issues unearthed during the process. Misconceived notions about project cost result from inexperience.
If someone has never worked on or had experience with a renovation before, they may not know how much a certain material or feature will cost, nor will they understand how much the cost of labor is. Qualified Remodeler pointed out that, as a general rule, most consumers will underestimate what a remodeling project will cost. Because of this, it's easy for people to experience sticker shock when a contractor tells them the cost of the project.
"Most consumers will underestimate what a remodeling project will cost."
Sticker shock isn't a good thing for the buyer or the contractor. It can cause negative feelings for the consumer, which may take away from the pride or excitement they should feel during and at the end of the project. It can also cause tension between the customer and the contractor. Finally, it may cause the consumer to change his or her mind, or go with another company that sells lower-quality materials for lower prices.
The best way to avoid sticker shock for inexperienced homeowners is to educate them about what goes into the cost of a project. This method is called price conditioning.
Price conditioning today can be both passive and active on the part of contractors, as pointed out by Professional Remodeler. Websites like Houzz.com show remodeling projects and how much various materials and elements cost, helping shape consumers' expectations about pricing. Other online tools and Web searches will also facilitate the information process.
However, contractors can take an active role in price conditioning as well. Professional Remodeler pointed out one business that included a tab called "How Much?" on its website. This shows how much different projects will cost, laying them out in various price ranges. It also describes why a high-cost project might cost more than a low-cost one.
Qualified Remodeler pointed out that it doesn't take a fancy website to help consumers begin to develop realistic expectations about how much they'll pay. The magazine suggested giving new customers a Pre-Positioning Package that explains the value of certain elements as well as their price. These are helpful because consumers tend to trust information that is printed on paper rather than the words a salesperson might say.
The PPP should be given to the consumer prior to the first meeting. Encourage the customer to review it before the meeting. Then, during your first appointment, you can review the information in the package or explain other elements of the renovation.
Some consumers might not yet be sold on the price. After all, a renovation usually isn't cheap. For someone who entered the process with a low estimate about what they would be spending, the price is an obstacle they'll need to overcome. Qualified Remodeler pointed out that if you have make clear why certain aspects of the project cost what they do and explained the value of them, you shouldn't have to worry about them shopping around. They'll discover that your prices are accurate, that lower prices generally mean lower quality, and they'll come back.
In some cases, a consumer will vastly underestimate the cost of a project and genuinely not have the finances to afford the renovation. Many adults today are reliable homeowners but have less-than-perfect credit scores. This will prevent them from getting an affordable loan to help with paying for a remodel. Some may be turned down for financing outright by their bank or a lender.
In these instances, it's even more difficult to alleviate the sticker shock. However, if the project is a much-needed one, like an upgraded HVAC system, or a highly anticipated one that will increase the home's value, like a new kitchen, it's important to overcome this obstacle.
Offering financing at your business can help with this. Consumers will be able to get the funding they need to get the project done, plus it will position your company for return or referral business.