I am frequently asked by prospective customers how much I charge per square foot. I recently taught an Institute of Residential Marketing course for Builders, Developers and Realtors. One of the chapters was titled Customer Value and Marketing and provided a methodology for measuring value other than by price per square foot.
What motivates someone to select one builder or remodeler over another or one builder’s home over another’s? It is the perceived value. Price per square foot seems to be the most common way for people to define value. Price / Square Footage = Value. By definition, the lowest price/square foot represents the best value. But the problem with this value equation is that it completely ignores other attributes that most buyers associate with quality. Price is not an attribute of quality.
Wouldn’t you agree that a better way to quantify value is with the equation Price / Quality = Value. Using this equation requires the customer to create a list of those attributes they associate with quality and then rate the importance of each attribute (say on a scale of 1 to 10) in their decision to buy. Living area or square footage could be one of the attributes. But here are some other things that might be included in the list:
· Location
· School District(s)
· Community
· Size of homesite (lot)
· Exterior design of home
· Interior design of home / Floor plan
· Number of Bedrooms
· Number of Bathrooms
· Size of rooms
· Living area (sq. ft.) of home
· Standard features included in the home
· Available options
· Ability to customize
· Quality of materials and workmanship
· Energy efficiency / indoor air quality
· Builder’s reputation
· Builder’s Customer Service Program
· Special incentives offered by builder
What attributes would you include on your list? How would you rate them in order of importance in your decision to buy?
Once you’ve created your list of attributes and rated the importance of each attribute in your decision to buy, you can use the same list of attributes to rate the Builder’s performance with regard to each attribute.
Wouldn’t you agree that this is a method of selecting a Builder or a Builder’s home is better than making your selection based on price per square foot?
Chuck Miller
President / Builder – Chuck Miller Construction Inc.
www.chuckmillerconstruction.com