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Customer Price Expectations vs. Reality

Submitted by admin on Fri, 12/02/2016 - 15:17

Last summer a friend told me he was getting ready to remodel his kitchen. “Did I have any suggestions or recommendations?”

I gave him a quick overview of cabinet quality. Then we talked about the pros and cons of working with a kitchen designer who did contracting, or a design build remodeler who sold and designed kitchens, or a contractor who recommended a kitchen designer.

He then showed me a floor plan designed by an independent designer (she wasn’t affiliated with a company), but recommended small local shops (my least favorite approach, but I did circle back around to give him my opinion on that one).

He then asked, “Can I do it for $50,000? I have to do it for $50,000. That is my bottom line. The house doesn’t justify spending any more money on the kitchen.”

His house is in south central PA and is valued at approximately $300,000. So at $50,000, he did have a nice budget relative to home value.  

Our local real estate has nice steady growth. And even during boom periods, it doesn’t spike much.  Living in the area I understood his concern. I know the payback on a remodel his size is longer.

I did try to re-direct him a little-I mean we are friends. I said, “The problem with a strict number is that you don’t know a thing about remodeling a kitchen. And you really haven’t given me anywhere near enough information to know either.  I don’t want to sabotage the process by speculating about remodeling costs, appliances, what grade of cabinets you buy, etc.… “

We looked at his design some more. And that was the last we talked until after the project.

So what did he spend? All in for his kitchen remodel-$62,000.

A couple of thoughts.

He was the guy that couldn’t spend any more than $50,000. Somehow he spent $62,000. How did he go from a guy that could only afford $50,000 to a guy that could afford $62,000?

1st. He always could afford $62,000. His price expectation was not driven by either his financial reality or the project's real cost, but rather a guess. Or a hope, but definitely not reality.

2nd. And he told me this without hesitation “to get what I wanted I needed to spend $62,000.”

Think about the power of “want” next time someone low balls a budget to you.

I know not everyone will increase their budget by 24% and $12,000. However, I’d rather be the designer that really digs into the customer's “wants” before I go scrambling for a way to cheapen the project.

And potentially lose a project based on a guess.