Contractors Find New Profit Stream After the Build

There’s no denying that the construction and housing industry can have its ups and downs. We don’t have to think too far back to 2008 to remember that. But, there’s an underlying source of revenue —one that doesn’t see dramatic ebbs and flows— that can help you increase your bottom line and build relationships and trust with your clients. And, it’s home maintenance!

Consider the automotive industry. Edmunds.com tells us that more than 40 percent of gross profits for an auto dealership come from the service and parts department. According to research from Arthur D. Little:

Rapidly declining profit margins in the new car sales business together with the continuous extension of car life are making the after sales business increasingly important.

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Focus on Profit Margins in Construction

Profit margins, in any industry, are always a concern. In fact, material costs began a steady rise in the spring of 2016, and observers predict they’ll continue to climb in the coming years. Associated Builders and Contractors earlier this year identified these key inputs that contribute to the overall costs of construction materials:

  • Prices for steel mill products expanded 4.6 percent from a month ago, but are down 5.2 percent on a yearly basis.
  • Iron and steel prices expanded 5.8 percent month-over-month, but are down 2 percent year-over-year.
  • Softwood lumber prices expanded 2.2 percent for the month and 6.3 percent from May 2016.
  • Fabricated structural metal prices remained unchanged month-over-month and are down 1.9 percent year-over-year.
  • Prices for plumbing fixtures and fittings expanded 0.2 percent for the month and are up 0.3 percent from the same time last year.
  • Prices for prepared asphalt and tar and roofing and siding products expanded by 0.4 percent month-to-month and 0.7 percent year-over-year.

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Contractors Don’t Have to Reinvent the Wheel

In the same way that car dealers realize considerable additional income by providing service and maintenance after the sale, contractors can see their profit grow when they create a long-term relationship with homebuyers.

The automotive industry has been doing this for years. After-the-sale maintenance provides dealerships with the ability to stay in close contact with their clients months and years after the initial sale. They’re able to build trust and relationships, which impact future sales and referral opportunities.

What’s more, maintenance and repair is static. It’s not going to ebb and flow in the same, often drastic, cycles that the construction industry has seen historically. It’s an opportunity for contractors to create an ongoing revenue stream that can keep them afloat when times are tough, and can get them ahead when times are good. Remember, a market downturn is inevitable, but it’s easier to build out a client list when times are good, you’re building, and you can work a service plan into the overall bid for the home or remodeling project. That recurring income can keep the business afloat when larger projects die down.

But, contractors don’t have to reinvent the wheel. At Glasshouse, we’ve created the process and technology needed to provide your clients with ongoing service —home maintenance— after the sale, thus allowing our contractor partners to open up a whole new revenue stream. It’s plug and play!

“We’ve found that maintaining long term relationships through home maintenance with our clients not only increases revenues, it also increases the value of their properties, and mitigates systemic issues developing over long periods of time. Increased facetime with our clients leads to more eyes on their property…  which leads to a higher level of protection on what, for most, is the largest investment they will make over the course of a lifetime.” – Jed Daoust, Principal/CEO at Daoust Design and Construction

Customer Relationships. Managed.

Preventative maintenance is key to retaining a home’s value and maximizing the life and efficiency of its systems. Contractors are ideally positioned to advise and facilitate the ongoing maintenance of the homes they build.

Providing homeowners with a comprehensive maintenance plan helps them to feel confident in their purchase and in their ability to retain the value of their home. Not only can this create income for contractors, but it can establish an ongoing professional relationship that lasts for many years beyond the sale.

Learn more by connecting with our team at Glasshouse today!


 

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