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June 2024

Stay competitive in a tight market

27 May 2024, Business Tips, Learn, Prove Your Know How

It can be difficult to stay competitive when the market tightens but, with some flexibility and creative thinking, it can be done! The Successful Builder Graeme Owen explains how 

In the ever-changing landscape of the New Zealand new home building and renovation market, builders are facing a unique set of challenges. Many prospective new home buyers are growing increasingly hesitant to spend money on what they see as a high-risk venture and those undertaking renovation work are becoming much more price-conscious. So, you must be prepared to adapt your strategies to remain competitive and profitable.  

In this article, I’ll explore some effective strategies for navigating these challenges and even (hopefully) thriving in a difficult market environment.

1. Understanding market dynamics

The first step in addressing these challenges is to understand market dynamics. In recent times, customers have become more cautious with their spending, particularly on large investments like home renovations. Economic uncertainty, coupled with rising living costs, has led to a greater emphasis on value for money and cost-conscious decision-making.  

You have probably had to make some of these decisions yourself, so use your own experience to help you identify with your prospective clients’ feelings.  

2. Transparent communication

Being open and honest in your communication is key to building trust and managing your client’s expectations in this environment. Don’t be afraid to be honest with your customers about the uncertainties in material and subcontractor costs. Also, be upfront about pointing out any potential risks associated with the project.  

When you foster open dialogue and provide clear explanations, you reduce the possibility of misunderstandings. Furthermore, you build a stronger relationship with your client. It will help if you expand your initial consultations and fully discuss project goals, budget constraints and potential challenges before expecting any contract to be signed. 

3. Flexible pricing models

Traditional fixed-price quotes may no longer be feasible in a market where material and subcontractor costs are subject to fluctuations. Instead, you may need to offer a mix of fixed and cost-plus models.  

With a cost-plus contract (where the client pays the actual cost of materials and labour, plus a margin) there is transparency about the actual costs involved in the project. While this does shift some of the risk onto the client, it also means they can stand to benefit should the project run well. 

Similarly, a cost-plus contract allows for greater flexibility, as the client only pays for the actual time spent and materials used. This can be particularly beneficial for projects with uncertain timelines or scope changes. 

However, where there are variations from the initial specifications, make sure you keep careful details of the spec changes and, if possible, the estimated costs associated with the variation. This will prevent misunderstanding should the project exceed the estimated cost.  

4. Detailed contracts

Detailed contracts are essential for protecting both parties’ interests and minimising disputes. Whether fixed price or cost-plus, they should clearly outline the scope of work, pricing structure, payment terms, provisions for handling cost increases or changes in the project scope and how supply delays will be handled. 

For example, contracts should include clauses that address how cost overruns will be handled, such as requiring client approval for any additional expenses beyond a certain threshold. By establishing clear expectations from the outset, you should avoid misunderstandings and conflicts – especially in the last stages of the project. It’s also important to note that for any work above $30,000 (including GST), it is legally required to use a written contract. 

5. Value-based selling

In a price-conscious market, builders must differentiate themselves based on the value they offer rather than simply competing on price alone. Emphasising the unique qualities and benefits of your services can help you justify your price – especially to customers who are looking for quality. 

For instance, you might highlight your expertise and craftsmanship, your attention to detail, or your commitment to your customers’ total satisfaction. Showcasing relevant past projects and providing client testimonials is a sure way to demonstrate your track record of delivering exceptional results. 

6. Efficiency & cost control

Efficiency and cost control are essential for maintaining profitability in a contracting market. You should continuously evaluate your processes and identify areas for improvement. Develop a team culture that is always looking for ways to streamline operations and reduce waste. 

For example, you might negotiate better deals with suppliers, work carefully on scheduling to reduce downtime, or spend time training your team and researching technology that will improve productivity.  

It’s important to be proactive in managing costs and maximising efficiency, so you can maintain your competitiveness while delivering high-quality results. 

7. Diversification

Diversifying what you offer can help mitigate the impact of market fluctuations. Also, it brings you into contact with a broader range of customers. Maybe you can expand into related services, such as small repairs and maintenance, landscaping, energy-efficient upgrades, or special projects. Offering energy-efficient upgrades may appeal to environmentally conscious customers seeking to reduce their carbon footprint and lower their utility bills. Growing your list of satisfied customers (from smaller jobs) can also grow your referral base! 

8. Customer education

Educating your customers about the long-term benefits of investing in quality renovations and home improvements can help overcome price objections. Emphasise the longer-term value that you can bring, such as increased resale value, improved comfort and livability, and energy savings. Post articles and guides on your website that explain the benefits of different renovation options and the return on investment they offer.  

In conclusion, while a changing market does present its challenges, builders can overcome these by adopting a proactive and strategic approach.


Graeme Owen is a builders’ business coach at thesuccessfulbuilder.com. Since 2006, he has helped builders throughout New Zealand get off the tools, make decent money, and get more time in their lives. Grab a copy of his free book: The 15 Minute Sales Call Guaranteed To Increase Your Conversion Rate or join Trademates and connect with builders who are scaling too

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