flexiblefullpage - default
interstitial1 - interstitial
Currently Reading

Handling Allowances

Advertisement
billboard -

Handling Allowances

Five tips for overcoming common pitfalls when working with allowances


By By Chip Doyle June 18, 2018
This article first appeared in the June 2018 issue of Pro Remodeler.

In a perfect remodeling project, everything would be pre-specified precisely and no preexisting conditions would rear their ugly heads. Good luck with that! 

Because the world is not perfect, allowances are necessary and often helpful to all parties. Yet they create problems as well. Here are five tips to mitigate the most common pitfalls. 

1. Deal with drama up-front. Customer service issues often arise when the homeowner is surprised by something. (I teach my clients: “There are no good surprises in good customer service.”) If a remodeler avoids discussing the challenges that may arise later, they increase the chance that issues will occur. Instead, contractors should discuss what can happen with allowances, the financial ramifications, and the responsibilities of all involved.

2. Clarify the costs. Whatever method you use to disclose costs to the customer, I suggest making sure the homeowner agrees to a format in advance. Show past examples of allowances and the effect a specific selection has on the budget. This helps ensure there is no confusion about how calculations will be made with each allowance choice. Failure to do this up front can result in angry customers who think they can withhold payments near the end of the project. 

3. Control the options. Technology has created a lot more product selection—too much, in fact. Now some faucets need an electrical feed, and the refrigerator requires a clear internet connection. If you let your customer shop with no careful guidelines, you are setting yourself up for challenges. This applies to designers as well. I often discover the designer or project manager was discussing options without regard for cost. They think that telling the customer, “This is over your budget,” is adequate to manage expectations—but it’s not. Much better to avoid discussing out-of-budget options in the first place. If the customer drags you kicking and screaming to consider a more expensive choice, ask how the total project budget will be affected. Get clear on the impact to his or her payments.

Show past examples of allowances and the effect a specific selection has on the budget. this helps ensure there is no confusion about calculations.

4. Think of each allowance as a specific sale. Each allowance has to be sold. That means understanding the selection priorities and needs, keeping any possible solution within budget, and involving the right people. Don’t let your top salesperson close a $200,000 job and then let an untrained employee “un-sell” it by improperly handling the allowances. Keep the salesperson involved, or give your employees the tools to be successful.

5. Share information with the designer. When a salesperson signs on a new customer to begin design, there is always a discussion of the total project budget. The salesperson has obviously already done some calculations for how much he or she is setting aside for countertops, cabinets, and fixtures. Unfortunately, these breakdowns are not always shared with the designer. The designer tries to make the customer happy, only to find out weeks later that the project is going over budget. When designers are guided by these up-front budget constraints, they have more success hitting the big budget at the end.


written by

Chip Doyle

Chip Doyle teaches salespeople “how to sell without sounding like a salesperson.” He speaks at dozens of events per year and is the author of Selling to Homeowners – The Sandler Waychipd@sandler.com 


Add new comment

Plain text

  • No HTML tags allowed.
  • Web page addresses and email addresses turn into links automatically.
  • Lines and paragraphs break automatically.
  • CAPTCHA

    This question is for testing whether or not you are a human visitor and to prevent automated spam submissions.

Related Stories

AnotherStory: Revamping the Second-Story Addition

An architect and remodeler are marketing a new method for completing second-story additions

How to Replace a Window (Part 2)

This time it’s in a fat wall wrapped with a housewrap air barrier and exterior rigid insulation

To Vent or Not to Vent a Home?

The Model ReModel 2022 remodeler must make a decision for the net-zero accessory dwelling unit

3 Pro Tips for Insulating Foundation

Symbi Homes builds and remodels green from the ground up at the Model ReModel 2022 project, the Regeneration House

Using XPS to Insulate Foundation

Symbi Homes plans to achieve several green certifications for its remodel of a 19th-century Victorian, our Model ReModel 2022 project.

Siding Restoration on a Historic Home: Part 1

In order to give our Model ReModel 2022, a 19th-century Victorian, a proper facelift, the Symbi Homes team opted to repaint in a new palette. The age of the home required a specific approach to manage lead paint and historical requirements.

The New American Remodel 2022: Performance Showcase

The New American Remodel 2022 team transformed an old home into a Net Zero thoroughbred while keeping its charm.

What is a Deep Energy Retrofit?

Model ReModel 2022 will undergo a deep energy retrofit—here's how.

Estimating Three Ways

Three remodelers reveal how they estimate a project

10 Criteria to Measure the Health of Your Business

Richardson walks business owners through different areas to reveal necessary insights.

Advertisement
boombox1 -
Advertisement
native1 -

More in Category




Advertisement
native2 -
Advertisement
halfpage1 -