Using sweat equity to reduce renovation costs
Remodelers are becoming hyper aware of consumer spending habits. Even with an economic recovery, many believe the shift in the consumer mindset from over-indulgent to conservative spending is here to stay.
“The value-conscious consumer is not going away with a recovery,” says Rich Carl, president of iKitchens Etc. LLC, based in Falmouth, Mass. “There’s a fundamental shift in how people spending money, and it’s all about value, saving and frugality.”
Remodelers are going to have to adjust their sales approach and create more affordable options for clients. Carl’s company embraces the affordability factor and makes it a key marketing message to attract the budget-conscious, detailed-oriented, value-driven clients.
Carl describes his clients as middle-class, highly educated, environmentally conscious and for the most part, tech-savvy. One variance of his typical client is an age division, spanning from young couples with young kids or empty-nester retirees.
They all have something in common—tight budgets and flexibility. “I would say 80 percent of people don’t have a set budget when they come to me, but based on what they want, we work within the client’s constraints by finding ways to offset costs,” Carl says.
The primary way Carl offsets costs is through “sweat equity.” Clients are given the opportunity to work on the project, as a form of payment in order to keep costs down.
Clients may choose how involved both parties will be in Carl’s do-it-yourself assist program.
The most typical “sweat equity” scenario is clients contributing to certain job functions such as demolition or jobsite cleanup at an average laborer’s wage. Depending on how much the client does, that amount of money is subtracted from the project cost.
Carl also has an option to hire a master carpenter by the hour to assist or teach homeowners how remodel. They can work side-by-side with the clients or they can train clients for a day and have them finish. This option works best for more extreme do-it-yourselfers who need professional assistance at a certain stage. It’s also a preferable option for clients who enjoy home improvement and are interested in learning.
“Either the client has a really tight budget and is able to do the grunt work to get the project they want or the client is a home improvement enthusiast, who enjoys learning and participating in their project,” Carl says. He sees this most often in his retiree clients, who turn their home improvement projects into a hobby.
Things can get tricky when clients have lopsided expectations. Day jobs and other distractions can get in the way of people getting the job done in time, or some are physically unable to finish, or worse, some have created more damage to their home. If the client’s involvement causes more damage than repair, they must cover the additional costs. Carl goes out of his way to prevent this from happening, spending time on the front end training or explaining the process to clients.
“Communication is key. We tell them ahead of time exactly what they need to do, how to do it safely, how to reduce damage to the property and anything else they need to be aware of,” Carl says. He says consistent communication with clients also opens the door for clients to alert him when they’re falling behind.
Other affordability factors in Carl’s business allow clients to select and purchase their own fixtures, and he even provides expert IKEA®kitchen installation services.
“I think people like our flexibility and it shows a willingness to make cuts in order to meet their goals,” he says.
Plus, having an affordable business model opens his services to a wider group of clients, both in terms of incomes and personalities. Since starting his company seven years ago, just before the bubble burst, iKitchens has grown every year, consecutively.—Morgan Zenner