Why Do Upgrades Cost What They Do?
Like all conscientious business owners, we pay close attention to our customers’ comments. These comments are the primary driver of the evolution of our business practices. The general aim is to do our best to let our potential customers know what they can expect from us, then deliver on those expectations. One of the ways we try and stay informed is by using a third-party customer survey company to ask our customers how we are doing.
One area where we consistently have poor scores is on value-for-money on custom upgrades. Our survey asks customers to agree or disagree with the following statement about optional upgrades and colours:” the value of options for the price paid was reasonable”.
It’s not just us that scores poorly on this. All new home builders do. We know this because our survey results compare the responses of our buyers with an average response from the customers of numerous other builders.
So why do we all score were poorly? The simple answer might be that we all charge too much. But that’s not necessarily the case. We work in a very competitive industry, and all of our competitors do the same as we do: pay close attention to pricing because we don’t want to put ourselves at a disadvantage by being more expensive than the builder down the road.
Perhaps we don’t do a good enough job explaining to customers what it is they are actually paying for.
The first thing regards the quality of the product. From time to time a customer will tell me that they went to a big-box home improvement store and saw a similar item for a lot less than what we are charging. With all due respect to the big-box stores, they are generally offering products that range from low to medium price, with corresponding low to medium quality.
I encountered this myself recently when we had an electrician coming to our home to do various odd jobs. I thought it was an excellent opportunity to purchase and install a ceiling fan in our bedroom. I went to the big-box stores and learned that even the best ceiling fan looked like it would belong in a cheap hotel bar. I then went to Marchand electric, which happens to be our company’s supplier of electrical fixtures, and picked a mid-level fan from their lineup. It was almost twice as expensive as the best big-box fan. But it looks great, makes no noise and I can just tell that it’s a well-made fixture that will last for a long time.
At Tartan, all of our fixtures and finishes, whether standard or custom upgrades, are of a higher quality, and cost more than what you will typically find in a big-box store.
The second thing to consider is that the process of selecting standard or custom upgrades is time-consuming. Several staff members work at this full-time, and there is often a fair bit of communication between us and the supplier regarding the finer details of the selections.
Thirdly, sometimes installation costs can be considerable.
Finally, all fixtures and finishes are covered by the Tarion New Home warranty. This goes above and beyond the manufacturer’s warranty. If the item is in any way defective within the first year, we, the builder, are obligated to repair or replace it at no cost to the homeowner. Luckily, this doesn’t happen very often because we do pay such close attention to the quality of what we buy and install, but we do have to build in the cost of defective items into our pricing.
For example, you might think that could save some money by installing your chosen upgraded faucet after closing. You might be a do-it-yourselfer, figuring you can save some money by installing it yourself. If that faucet leaks and causes damage to your cabinets and floors, those things are no longer covered by the Tarion warranty.
In summary, it’s true, most of the items that we sell from our Design Centre are more expensive than what you will find in the conventional retail store. But as I’ve illustrated above, there are legitimate reasons for these costs. With a better understanding of these reasons, I believe our customers will begin to appreciate that they are getting very good value for their money when selecting standard or custom upgrades in our homes.