The Business of Building

Several years ago there was a study done based on exit polling from model home visitors on what they thought builders make on each home. This was done in the context of a national survey by the NAHB (National Association of Homebuilders) on what builders actually make. Most people believe that builders make over 20% on their products. Nationally, builders were actually making between 0 and 5%. The cost of running the business was 10% of gross revenue. Recently, another such study was done. The cost of simply running the business has risen to 12% of gross revenue, and overall  profitability dropped those same 2%. What this means is that building companies, nationally, are under tremendous pressure to stay profitable while still satisfying their customers. We see this pressure every day. Since we started Myers Homes in the early ’90’s, most of the builders that existed when we started are gone. Their staffs scattered, their customers orphaned, and their vendors cast off. Since 2005, nearly 70% of the builders in our market have vanished! We, though, are still here. Our customers still get a return call if they need information or help with something, our vendors are still  here, and we’ve retained most of our staff over the years. Often, especially in a bid situation, we are asked to change our business model to accommodate the pricing structure of others. We’ve recently lost a few jobs because we wouldn’t/couldn’t get low enough in our pricing. I’ve found that price is paramount only for the shortest moment of the transaction- right up until the contract is signed. For the rest of the duration of the transaction- which may last for a year or more of plan development, construction and more years of warranty support, price isn’t an issue at all, but service becomes the most important thing. In fact, most of the people I meet that had bad experiences building or remodeling with another company never talk about the pricing choices they made and are only reflecting on the bad products or service they received in exchange. Maybe that’s why we still work for our customers many years after the initial  sale. Call us- give our way a try. It’s much more relaxing!


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