It is easy for clients to see the progress that is made on the job site, but perhaps more difficult to visualize the behind-the-scenes work that takes place for things like ordering products, scheduling and paying subcontractors, and working with permitting departments. All of these items must be accounted for somewhere in the billing process, and many builders have traditionally done that by applying mark-ups to line items to compensate.
Some members of the home construction industry are changing the way they do their billing in order to help their clients understand where all the costs go. They find that enhancing the transparency of their billing format can be helpful in securing a contract.
An article about the challenges of billing when clients have online access to all of the wholesale pricing was the cover story in an edition of ProRemodeler last fall. Different contractors innovate in different ways so that their clients are better able to understand the reason for the more abstract expenses. From adding specific line items for professional services like those listed above to providing an estimate including a specific product price (rather than providing a typical range for that expense) and editing the math if a different selection is made, account for some of the thoughtful ways builders have begun to handle estimating and billing so that it makes more sense.
A first person story Andy Stauffer contributed to Builder and Developer (“Transparency in Building is a Good Path to Follow”) recounts his experience–what he called a ‘lightbulb moment’–with a client explaining that before they signed the contract they wanted to come in and discuss the estimate in great detail. “I just like to know where my money is going.” This is certainly a feeling that we all understand, whether running a business or a household. Melani Harmon feels the best thing she can do is sit down with clients to go over their proposal line by line. It is important to Harmon Builders that every client can trust that their money is being used prudently.
The new Harmon Builders website features some details explaining how we estimate expenses and the range of contract options we provide, in an effort to make information readily available to prospective clients. Please visit us here to find out more, and reach out with any questions you may have.
By Melanie Smith-Bell