I remember a sales call many years ago that began with the prospective client explaining that he was talking to three contractors for the job. He wanted each of them to create a plan for the work so he could select the plan he liked best, then give all three contractors a chance to bid on that plan.
His approach would be a time waster for any contractor, and he had no interest in paying for the time those three contractors would have to invest. I explained to him “this is how we work,” but he wasn’t interested so I left.
Not all prospective clients are that candid about their game plan. That’s why so many contractors get busy designing, estimating, and quoting projects, only to be told, “I just wanted to see what it would cost,” or “I’m getting three bids,” or “We won’t do this work until next spring.” Prospective clients don’t respect your time, which is why you need to set boundaries.
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With a renovation or remodeling project, your goal from the very beginning should be to sell your services by way of a design agreement. Don’t focus on selling the job. Sell an agreement to design the project since that’s the first necessary step before the job can start. It’s also easier to sell a design agreement than a full-blown remodeling project.
I’m not talking about small jobs; I’m talking about projects that require design work. Those projects often require a great deal of time and effort to determine what the client wants done. They require plans drawn up and selections made before a detailed estimate can be put together. That takes time, and your time has value. Don’t do it for free.
When you go on a sales call, the first thing you’ll sell is yourself. That is what the client buys first. Then the client will buy your company, so you need to be sure you have your best foot forward there as well. A solid website that your client can get to know you and your work before the sales call goes a long way toward selling your company before you even meet.
Your presentation has everything to do with getting the customer to commit to the design agreement. Your presentation must include the four basic questions:
- What do you want to do?
- When do you want to get started with this project?
- What is your criteria for picking your contractor?
- What is your budget for this job?
Keep your opinions and your advice in your pocket; ask questions. The only way you’ll know what they want done is by asking questions and listening. Once they’re comfortable that you understand what they want, they’ll begin to trust you.
Once they trust you, it’s an easy step to putting together a design agreement. With a design agreement, they’ll get the job they want within their budget, and you’ll be paid for the work you do. Everyone wins.
What does the design agreement cover?
- helping the customer design the job and get the selection list completed
- setting a target budget range, clearly stating that this is a rough estimate only
- creating an estimated cost for the project, within their budget, so you can provide a firm fixed price quotation including allowance amounts where needed
- compiling the paperwork necessary to put the job together, including the plans, the written contract, and a job schedule
About that budget: don’t agree to a budget if it’s not reasonable. If you aren’t sure, do your homework before signing the agreement because you need to be within 5-10% of the target budget or you’ll have a lot of explaining to do.
You’ll see something magical happen when you start the actual design work. As your clients discover more exciting things they can do with their home, they’ll want to upgrade and get all they can while they’re at it. I’d do the same thing, and you probably would as well.
That’s why you need to take a no-nonsense approach to changes. Your clients need to understand that when they start adding or changing things, the price will change accordingly.
“As we go along, you’ll discover items you may want to consider including in your job. I want to be real clear here. If you ask me to include a Sub-Zero refrigerator in your kitchen and I tell you that it is going to add $6,800 more to your budget, I want to be sure you understand that means that the budget for the job goes up. If you want to switch from the composition shingle roof to a tile roof, the budget for the job is going to go up. In other words, when you make a change, the budget for the job will change as well.”
“I’m telling you this because I don’t want you upset with me if you add a number of items to the job that are beyond what we’ve discussed already and I come back to you with a final price that’s higher than your stated budget. Is that fair enough?”
Be sure to follow through. The minute they mention a change, you respond with a new price range. That lets them know that there is a relationship between the design and the budget. The price of the project will also be impacted by the choices they make.
A design agreement is a two-way street. They’ve made a commitment to you and you’ve made a commitment to them. Schedule a callback with the client while you are still in front of them. Now you have a deadline. This also lets them know that you take agreements seriously.
You can’t let this sit on your desk or wait for a rainy day when you have time, or you’ll get a phone call cancelling the whole project. After all, if you don’t have time to design the project and get it estimated, what will it be like when it comes to building their project?
Done properly, you can get a design agreement signed and a deposit in your hand on one of every three sales calls. You should be able to move to a construction contract on at least eight of ten design agreements that you sign.
This approach is covered in more detail in our book, Profitable Sales, a Contractor’s Guide, available as a printed book, eBook, or audiobook. The book will take you step by step through the details of how to get the answers you need to the four questions. We also have sample design agreements available in the book.
The knowledge and experience Michael Stone gained in his 60+ years in construction has helped thousands of contractors improve their businesses and their lives. He is the author of the books Markup & Profit Revisited, Profitable Sales, and Estimating Construction Profitably, and is available for one-on-one consultations.
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