Q & A Episode 38 - Pricing Pitfalls: How to Guide Clients Through the Toughest Part of a Build
Episode #38 | Q&A with Mark D. Williams | Pricing Pitfalls: How to Guide Clients Through the Toughest Part of a Build
Great builds start with great communication. In this candid solo episode, Mark shares his approach to managing expectations during the design and pricing phase—including how to spot red flags, ask smarter questions, and protect both your client and your business. A must-listen for builders who want to lead with clarity and confidence.
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About The Curious Builder
The host of the Curious Builder Podcast is Mark D. Williams, the founder of Mark D. Williams Custom Homes Inc. They are an award-winning Twin Cities-based home builder, creating quality custom homes and remodels — one-of-a-kind dream homes of all styles and scopes. Whether you’re looking to reimagine your current space or start fresh with a new construction, we build homes that reflect how you live your everyday life.
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Mark D. Williams 00:00
identifying your ideal client, making sure that you're very open and honest with your communication all the way through. And even if you do that, sometimes it can still fail. And understand that that's part of being a business owner. It's not easy. Again for me, 24 I had a couple projects like that, and I, I'm I was practicing what I'm preaching right now. I was doing all those things, and it still didn't work out. And then sometimes you do it, and people are like, that's great. Thank you. It's so helpful. Thank you for getting us there. Welcome to curious, bitter Podcast. I'm Mark Williams, your host today is Thursday, which is our Q and A and A question that was written in was, how do you manage clients expectations during the Design and Pricing time of a build? And it's a great question. We're constantly changing. It's constantly morphing. I think it a lot of it depends on each client how they like to be communicated. But I thought maybe just share a few experiences, some that we're dealing with right now, especially with some of the chatter around tariffs, and just, you know, talk about, how do we manage it? And I think, like any potential conflict is or discussion point, it's really just getting out ahead with communication. We recently were working with a client on a build, and we knew ahead of time, we just kind of created a grid spreadsheet talking about their land cost, their cost of their design, their architects, their design, the furnishings, the time frame financing, and just laid it all out for them, of all the things they need to consider a lot of times. As a builder, especially as a custom home builder, they're coming us, and we're just maybe one piece of the puzzle. You know, especially in higher end homes, we're responsible mostly for the construction, and depending on your trust or level of involvement that the client wants you, you may or may not be involved with architecture, or you may or may not be involved with the interior design selections or furnishings, and we try, as a custom home builder, try to be involved with all of them, because I can't effectively steer the ship if I don't know everyone that's on board. But not everyone has that experience. There are times where a client will or, in fact, we're working on two right now where the client is bringing us the plans and they've already designed it. I have very little options to change the price. I have one where the client is several million dollars over budget with another builder. They've let them go, and they're coming to me saying, you know, you guys have a great reputation. I'm going to meet with them, so we'll see. We'll see what they say. I mean, if they expect me to somehow magically shave off $2 million without changing anything on the plan, like that's not possible. And so that is one of the hardships about designing a home. And then as the builder, being the second one in, how can you effectively, what can you do? I feel like your opportunity to educate the client really starts before you even sign a contract, before you have that first design meeting, assembling the team, and then, really, every single time you have a meeting, sort of coming back. And I think this is a mistake we all make. I've made it many times. Sometimes you continue to make it, which is, clients will tell you a budget that they want, and you, you heard them. They heard you. I would recommend following up an email saying, this is the budget parameters we talked about. So they have it in writing, but even if it's in writing, it often changes. And it's not always the it's not always, let's say not. Nobody's at fault, but people sometimes don't remember what they say. If you if somebody says, hey, I want to be between one and 2 million. The builder hears 2 million. The client hears 1 million. And so that's a problem. You really need to identify what the actual budget is. And that particular scenario, I might recap that and say I heard that you said between one and 2 million based on what we our conversation, I think you're going to be higher. I think you should be budgeting between 1.6 and 1.8 million. Now you've redefined that and made it a smaller, smaller gap for them to have this big range on because I think every builder, remodelers had this happen. You leave the range really big. You get into design, you get into pricing. It comes back at 2 million and they're saying, well, we told you all along it was 1 million. And, you know, they they essentially react, and you're the villain as the builder, and it's no one is a villain, and no one is the good guy. You're just really just trying to do everyone is trying to do what's right for themselves. And really, as the builder, it's our job to sort of protect the client from themselves, and protect yourself too, and you want to have a great experience. So I think the more we can really drill in and narrow down a the budget parameters, but really make sure everyone's on the same page, having a lot of check ins. I used to wait till the plan was a little bit further along before I did price testing. I do price testing a lot earlier. I have a couple projects right now where we're pretty early in architectural design, and my gut is that the homes are more expensive than the clients wanted. I'm constantly telling the client, both verbally and written, that I feel like we have departed a little bit from their budget parameters that they gave me. And I think before we go any farther on design, we need to make some cuts, or we need to do a price test, or. Really find out exactly where this is. I don't like per foot price tests. I just don't think they're very accurate. And if I'm going to give you accurate information, we need to hit the pause button. And sometimes we're a victim of our own excitement. I know I am. I want to keep the design train going. It's really everyone loves to be on the design train. It's fun. You're picking out whatever you want. You haven't got to the checkout counter yet, so you're shopping, you've got a big cart, you're throwing everything in this in this cart, and then you get to the butt, and you're like, Whoa, that got expensive, and now you got to go back in the store and restock all the things you put in the basket. So I think checking in routinely with the clients and letting them know, for me, it's three ranges. Maybe it's 1,000,001 and a half million, 2 million, or maybe it's a bigger spread, maybe it's one, two and 3 million, and then you and then you lay it out. So you've got these several categories on the left hand side, landscaping and furnishings and architecture fees, and really just trying to paint the overall picture of what this investment is going to cost them. And I think if we are trying to help the client at the end of the day, you're just doing a better project. I know that some builders probably won't do this, because if you outline all of those costs, there's probably some they're probably gonna hold back, pull back on some of the things that they can control, which is the house. Meaning, if you tell them that, hey, on a $2 million build, they might spend 100,000 into your design, and they might spend 300,000 on furniture and blinds and rugs and all this other stuff, which I'm not a part of, that they say, Ooh, you know what that's going to be outside. We're going to pull back on that house 300 grand or 200 grand, or whatever it is. And so I, I just think you're better off helping the client. You are professional. You're trying to use your experience to give them the best experience possible. And so really, just painting a realistic picture for the whole thing, because it for them, it is a global investment. One thing I just recently figured out, I haven't done a spec home in what is the number like, 16 or 18 years, or whatever the number is, and so our clients always do their own financing. That's not something that enters the picture. So when a client tells me that their budget is $2 million let's say they probably need to factor in 110,000 in financial costs, in terms of carry costs, unless they're paying cash for it. But even then they Oh, that's a separate conversation. But anyway, the point is is, like, if they're borrowing money at 678, percent, whatever they're borrowing money at, that needs to factor in their carry cost. I usually don't bring that in, because if a client's telling me their budget is 2 million, that's the build cost in the past. I've always assumed, like they should know. They've already talked to a bank. They already know what they can afford. Someone has already told them, like, hey, in order for you to borrow this money or to build this home, you're going to have to have this much money set aside for interest. That sounds really I know the builders out there probably rolling their eyes, saying, Oh, we know this, Mark. I'm telling you, a lot of clients don't, and not that they don't, but it's a simple conversation you can have. It could be less than a one minute conversation. They say, hey, my budget is 2 million. And then your response could simply be, is that with or without construction financing? That's simple. That's just one sentence. And they could say yes, well now you know you have to come down. Or they could say no, and then you could say, Do I need to factor that in, or are you factoring that in that external? Again, you're just getting clarity. I also think it's an opportunity for you to demonstrate your knowledge on the project, and for you to demonstrate that you understand you're trying to protect their overall investment in the home. Because right now, as I'm building a spec home, like I have to figure out the carry cost I now am the bank, and so I have to figure out, like, how I'm holding this house for a year. Do I build in three to six months of contingency in that number? And these are all questions I have to ask, because I have to figure out how I'm going to pay for this. I think that is the one advantage of doing the spec home, or having some different kinds of homes, whether you're doing a remodel, a new home, commercial construction, spec home building, custom home building, remodeling. I think having a well rounded, you know, business platform helps you get better in each one, because you can take things that you learn in one and apply it to the other, and it just makes you a more well rounded entrepreneur, which, again, is going to appeal to your clients and your architect partners and everyone that you're involved with, because you just have deeper knowledge and you're really you're asking questions because you're trying to be the best. I mean, every time you go to the doctor, whether you're getting a chiropractic adjustment or open heart surgery, I feel like you still have to fill out 10 pages of what's your medical history. Have you ever seen a unicorn? Have you ever tripped over your big toe? Have you ever had surgery? Do you have anything metal in your body? The other day, I got an MRI for my knee, and was laughs laughing, and they said, Have you ever had a Do you have anything metal in your body? And I'm like, Well, no, but then as I'm like, laying there, is this thing going I'm like, Wait, do I have anything metal in my body? Because if I do, it's gonna rip out, isn't gonna hurt. And so I feel like sometimes having people redundantly ask you questions helps you self reflect and examine. So I've never thought about that before, but I think as builders and as entrepreneurs, we need to ask a lot of qualifying questions, and the questions are endless. And I think if a client knew how many questions we should ask them and will ask them, it gets a little daunting. So I think you have to have a plan to slowly learn who this person is. That's why I think it's more akin to a relationship. I don't think on a first. Eight you're handing your date back, when we're dating, a 10 page summary of your whole history. I mean, I think every time you meet with them, you learn something new. Oh, you like music. That's great. What kind of music do you listen to? Sometimes you file away these little tidbits for a closing gift. Maybe someone's really into the Eagles, and you find a old vinyl record of the Eagles, or something like that to demonstrate that you really listen to them, or simple stuff. What kind of coffee do you like to drink? It's just, it's another way to show hospitality. And I feel like this is a never ending way to keep improving. I know I have a huge amount of work to do in this category. Sometimes even knowing what to do, you just either don't do it, you don't prioritize it, you don't have the time, you don't make the time, whatever it might be. Ian, Lake
Speaker 1 10:40
society
Mark D. Williams 10:48
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Going back to the original question is, how do you overcome some of this? I think one of my common things that I tell people is that inevitably, most people during the design process get a little excited. Their eyes get a little big. You design the house a little bit, maybe bigger, fancier. You don't know what it costs. So right now, you're in play land. Why not? Let's add some beams here. Let's add a vaulted ceiling here. Let's, let's add a sun room. Let's add a pool, whatever it might be. And then when you get to Reality Check time of pricing it out, but forget about all the things that you added as a team, and I say as a team because you were there too as the builder. If you're sitting in on these architect meetings, you have a voice. You can raise your hand and say, Hey, Mr. And Mrs. Client, I think just so you know, this is probably going to add $250,000 for this pool. Is that something you want to do? And you know, but even if they do that again, a lot of times, people forget what they say, even if it's documented, even if you're right, even if you've sent them an email recap saying, Today, we added a pool. They said their budget was originally 2 million. You get to the bid presentation and it's two and a half million, and the only thing they see is it's two and a half million. How did we get here? And then you have to slowly use your experience and say, Well, this is how we got there. We added the pool that was 250 we added this, we added that, and we can take those off. And I think really just patiently walking them through the things that they added as a team and showing them there's a path backwards. I think the real danger is, if their budget is two and you're at 10 million or two and 8 million or something so far off that there's no chance you can modify that plan. Now, there's a chance where that can go. They can get really angry and the relationship can really sour, depending on how you play it and the temperament of the client, and honestly, the temperament of the builder and the architect partners as well. Because if you've so over design the house based on their budget, now they feel like they don't trust you anymore. And so I again, this goes back to constant communication and really making sure that you're in alignment with what their goals are. And that all starts with asking a lot of questions. So again, I think it starts with the very beginning, us as builders being better at asking questions, and so inevitably, even if you you do a great job of asking questions, you've got a great team. Inevitably, the house usually does come in over budget, and it's usually bigger than they initially wanted. So even before we price test out a lot of times, your instincts kick in. You're like, this house seems a little heavy in terms of cost. Are you guys open to making some design changes right now? And so I we have a client right now who's very receptive and just a great communicator, and the home design got a little bigger and but they were very open to we need to bring it back. I kept telling them, like, this feels significantly over the budget you've given. Me, we can keep going down this road if you would like to spend more money, but if the budget is going to be one of our major parameters, are you open to these changes? And to their credit, they were, and I think that's a great relationship. That gives me just a lot of hope it's going to be a great build, because they're willing to listen to their partners. And I love that. When that happens, what becomes difficult is when the clients will not listen to the advice. So they're they're saying, No, we love the design, but we don't want to change anything. I had this a year ago where a client, they had a very set budget, and I said, No problem. We can work with it within that budget. And we certainly could. We designed the home, and they kept adding. And adding. In every single meeting, I told them, you're adding, I sent them written documentation, you're adding. We got to the final pricing, and we were 35% over their initial budget. Not that shocking, frankly, because they kept adding and I said, don't worry. I said, here's all the things that we added, we can actually get you all the way back to your original goal. And they said, No, we don't want that. We want the house that we designed. Why would you design us a house that we couldn't afford? I felt like that was a really difficult place to be in because I said, I've been telling you every single time we meet that we're over budget. It's, it's your home. It's, I'm designing it for you. I can't I can only do so much if I you have not empowered me to tell you no, and as long as you keep saying yes, I'm giving you, I'm raising the flag and saying, This is too expensive. Are we good to go? And so that becomes a really difficult position, because telling the client that they're wrong or telling the client that I don't like the word fault, like it's your fault. It's the collective teams. How do you solve it as a team? And you can always get there, as long as communication always stays open on all the parties. But if one of the party members says, I'm not going to talk anymore, or I'm not going to I'm not going to listen to reason, that's it. It's over. There's not much you can do. And in some ways, it's like a relationship. It's, I talk a lot about relationships on the podcast, but it's true. It's for marriage to work. Both parties want to have to work at it. That's the only way it works, at least in my experience, unless someone else has the golden the golden marriage advice here. But if one person doesn't want it to work, it won't work. And I think the same is true of building a home, if, if the builder and the client want to make it work, you will make it work. You will figure out a way. You will get there. Both parties compromise you, you get through it, and you both have the ending goal. We want to build you a home. You want to move into it and enjoy this home. We'll figure out a way through but when one party doesn't want to do that, it could be either party. It could be the builder, it could be the client. If that happens, you've got really difficult problems. And so anyway, going back to communication, I think, identifying your ideal client, making sure that you're very open and honest with your communication all the way through. And even if you do that, sometimes it can still fail. And understand that that's part of being a business owner. It's not easy. Again, for me, 24 I had a couple projects like that, and I, I'm I was practicing what I'm preaching right now. I was doing all those things, and it still didn't work out. And then sometimes you do it, and people are like, that's great. Thank you. It's so helpful. Thank you for getting us there. I just got a text the other day. I asked a client to write in a we have a city council meeting tonight, actually, and I asked some of my past clients to write a letter just saying, hey, our company is a great company. We think they do a good job with this conditional use permit, those types of thing. And then later the client texted me, and she's I just missed working with you guys. The guys were so great to work with. And it's like getting texts like that from your clients who you built for two, three years ago, or however long it's been, is a really, it's a treat. It really makes you enjoy fills up that emotional gas tank to keep doing it, because we do have a lot of hurdles as business owners to overcome. We do have a lot of difficult scenarios to navigate, and then having really satisfied, happy clients that reach out to you and are willing, on short notice to write a letter of recommendation to support you. It's a special thing, and it shouldn't be undervalued. I have been speaking a lot lately on the podcast. I think it's important for us builders to remember what an important role that we play for families, regardless of what strata of home you build or remodel, like you're working in someone's home, that someone's going to live there, someone's going to sleep there, someone's going to eat there, they're gonna have their memories with their family there. And it's a really special thing. And so I think as builders, we need to take not that we do take pride in what we do, but I guess just, just take a moment to to enjoy that you are serving something you know, bigger than yourself. And I think that's why people keep coming back to building. That's why it's so empowering, is because we can help so many people. So hopefully these were a few things that you can relate to. Maybe the next time that you interact with a client, it'll give you a few tools to make sure that you're communicating to them clearly, and you can have a successful build, and they can have a beautiful home. Thanks again for tuning into the curious builder podcast. Thanks for tuning in the curious builder podcast. If you liked this episode, do us a favor. Share it with three other business owners. The best way that we can spread what we're doing is by word of mouth, and with your help, we can continue to help other curious builders expand their business. Please share it with your friends. Like and review online, and thanks again for tuning in.
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