If you think negotiating with your customers is tough now, wait a year.
The Internet’s hothouse environment is bringing to bloom a number of Web services that all intend to give your potential customers a sense of what their project will cost before you reveal your price. Some sites go even further by seeking to replace the traditional way of finding you—referrals—with a sealed system in which customers seek and contractors discover each other within that particular Web service’s world.
In February, Zillow introduced Zillow Digs. Houzz followed in July with Houzz Real Cost Finder. This month sees the arrival of an entirely new service called Porch plus an expansion of the estimate services at Planease (formerly RemodelorMove.com). All these come in addition to estimators from such services as Redbeacon, Home Advisor, and the granddaddy of the group, Remodeling’s own Cost vs. Value Report.
Each service collects and presents its data a bit differently (see “Shopper’s Fare” for more), but all promise to bring consumers out of the dark regarding project cost. Virtually all the remodelers we spoke with for this article said they haven’t felt any pushback that can be tied specifically to these online services, but they did say they’ve noticed more customers citing the Internet in general when they talk money. Combined with the recent recession, this has made customers more wary about bids and tougher negotiators in general, they say.
“Generally, I have to spend considerably more time explaining and educating clients about construction costs than ever before,” says Don Mirabito, owner of The Humble Cottage, in Grafton, Mass. “These online sites don’t really help.”
On the other hand, some remodelers welcome what amounts to increased transparency about prices. That’s because many customers they encounter—particularly those who take their cues from cable TV networks such as HGTV—routinely go into shock when they see how much a project really costs. Web-based cost estimates toss cold water on prospects’ low-price dreams, they say, removing the surprise when a real pro submits a bid.
For Alan Hanbury, it’s all part of a more general trend on price negotiation that’s eating up more and more of his day. “In the old days, if I was going to do a deck … you might be in a house for 40 minutes and you could leave,” says Hanbury, co-owner of House of Hanbury Builders, in Newington, Conn. “Now your 40 minutes is [spent on] what product you’ll put on the deck—you don’t even get to rails. Then you give a price and there’s another 40 minutes of discussion plus 20 minutes of haggling. (I’m in my fourth round of discussions over a deck. One couple had my brother there four times for two hours each. I think they think they are our unpaid consultants.”
Robin Baine of Baine Construction (its slogan: “Remodeling the Jersey Shore Since 1984”) agrees that the pushback is harder, but he—as do several other pros contacted by Remodeling—believes it’s partly because his less-skilled competitors haven’t estimated properly. As for the websites, he thinks operations like Houzz and Zillow are here to stay.
“Some of the pricing may at least set a realistic starting point because we find many people are unrealistic on the cost of things,” he says. “Most remodeling prices are driven by the type of finishes chosen. If [Web-based estimating services] say the average bath is $13,000, you can easily eat that up with tile and fixtures.”
Mirabito is one of several remodelers who say Internet cost estimators are making it more vital than ever for him to explain to prospects how much a job should cost. “They have to learn that if all things were truly equal, then the bids would all be the same,” he declares. “However, they are never really going to be the same, for good reasons. Company A may bid lower while still using the exact same materials as Company B. But Company B is using skilled people and Company A is using unskilled people. Some companies build above code with elegant design and craftsmanship, while others struggle to meet code minimums. Clients have to be educated that there’s a difference and that that difference is valuable!”
Hanbury is considering reducing time spent on education by doing what some remodelers, such as John Lang, do already: provide a set list of options, or no options at all. Lang, of Lang’s Kitchen & Bath, in Newtown, Pa., gives prospects just three budget options to choose from as a preliminary step to putting down a retainer. “Every person we meet has sticker shock, no matter how much we prep them,” he says. “Letting them know up front and limiting expectations is the most critical step when someone brings up prices seen on the websites.”
Lang also has begun to spend more time qualifying customers to sort out who’s fixated on what’s cheap rather than what’s good. It’s a habit that Cathy Haldeman, wife of the owner of Haldeman Contracting, in Council Bluffs, Iowa, says her husband, Gary, will need to spend time developing now that their firm has begun getting prospects from Angie’s List.
“Some are reasonable and care about quality,” she says of these prospects. “A few are strictly interested in price and seem to have no knowledge that their experience can differ dramatically from one contractor to another. This they will learn in time. We just have to get better at qualification—a skill we didn’t really need when all new clients came from referrals.”
Marty Hughbanks of Spacific Coast General Contracting, in Medford, Ore., regards Houzz as a great tool for his customers beyond giving them a better idea of remodeling’s true cost. “To have the customers become more proactive in how their dreams are being put together keeps them in the loop,” he says. “Plus, the idea is a great tool for helping out the customer in decision-making, especially on color charts.” Baine says that as a personal user of Houzz, he loves that he can search anything and come up with great ideas. But, he adds, “professionally, ... it is truly a love/hate relationship for me.”