Who's your competition? The new-home builder? The SUV dealer? The remodeling company on the other side of town? All of the above.

Vacation in Italy, or updated bathroom? Master suite, or second home? Recreational vehicle, or new kitchen with granite counters, stainless steel appliances, and cork flooring?

Remodeling contractors may believe they compete strictly against other remodelers. In fact, some may think they compete against only those remodelers who provide the same level of product and service as they do. But consumers, especially those with six-figure incomes, have many choices when it comes to spending. Some fall into the category of luxury; others, necessity. Remodeling could be either, depending on how it's presented.

"I'm not competing against other remodelers," Tom Avallone, owner of Cobb Hill Construction in Concord, N.H., points out. "I'm competing against other lifestyle decisions." Clients are "stretching to buy the Mercedes SUV instead of the Jeep, and that extra $20,000 is the bathroom remodel." Some, Avallone says, will "put off that master bedroom suite remodel or kitchen remodel for the ski home they'll use with their kids for five or six years." Avallone's awareness of those kinds of choices drives his sales process.


Even in the current climate of economic uncertainty, several factors combine to make home renovation appealing. "What I've seen," says Minnesota remodeler Mark Peterson, whose company's 20 annual jobs average a half million dollars each, "is that they're putting their money in the house because the stock market's so lame." Homes in the upscale Minneapolis suburb of Edina, where M/A/Peterson builds, increase in value 5% to 10% each year. "At least they get the enjoyment out of it, vs. seeing it wither away" in the market.

Not long ago, Dave Brady, owner of Oak Design & Construction in the Chicago suburb of Oak Park, had a client who was trying to decide whether to remodel or buy a six-figure sailboat. Such people, Brady says, are open to the argument that the run-up in real estate prices, combined with diminishing 401(k) plans, a stagnant stock market, and low returns on traditional investment vehicles such as certificates of deposit, makes home remodeling money well-spent. "Ten years ago, there was a lot of soul-searching about putting $200,000 into that home," Brady says. "Today, there isn't that soul-searching."

Peterson says that for many of his clients, it isn't "either/or" but "both, and": They can afford both the second home and the whole-house remodel. In that sense, he says, "the competition isn't some tangible external, it's all in the minds" of those prospects. Winning them over takes convincing clients you'll provide a painless remodeling process and beautiful results.

Wants vs. needs

Albuquerque, N.M., remodeler Tom Poulin, owner of Poulin Design/Remodeling, points out that remodeling also vies with luxury automobiles and motor homes. Still another competitor is the new-home market, where Poulin competes by commissioning a future-value appraisal of large-scale remodels to demonstrate the solidity of the investment. For Poulin, whose jobs average $30,000, the trick is to focus on client needs rather than wants.

"If you focus on that need, you're fulfilling that need, and they're more likely to spend," he says. Needs include not only home maintenance and repair but, for instance, kitchen and bath updates, without which the value of a home can wane, even while real estate prices rise. Offer clients financing, Poulin says, and remodeling looks yet more appealing, since few can afford to pay lump sums. Finally, stay organized and don't dawdle.

"All those things have to land in the proper order, and with exact timing," Poulin says. "Because, if it takes too long to design it, estimate it, and get a contract in front of [the clients], they could already have taken that vacation."

Selling emotion

What exactly sells the job? Is it the "steak" -- the actual project itself -- or the "sizzle" of experiencing that finished space? Avallone argues it's the sizzle -- the emotional enjoyment, real or anticipated. Locating those emotions, and appealing to them, makes for a successful sale, or an up-sell. The home is who you are, what you like, and what you do, and reminding clients of that is powerful and can make the high-ticket competitors seem like toys by comparison.

"I try to bring it back to the fact that an investment in your home is more than just dollars and cents," Avallone says. "It's a place to support and comfort you. When you point out how important their house is to them, they respond to that. But that's something you can only pull off if you're genuine about it and have good rapport."

For Peterson, the appeal is also to emotions, but a different set of emotions. "What I find," he says, "is that when people are spending big money on projects, they're doing it because it's fun. You can't buy a good kid or a great boss, but you can buy this."