Quoting – Avoid The Race To The Bottom 

August 31st, 2018

We’re seeing a few signals across a variety of sources that suggest demand is easing slightly in the trade space.

House Prices

House prices and values nationwide reflect an easing through 2018. House prices relate to homeowners confidence that improvements they make to their home are going to add value. In a market with uncertainty around future house prices, homeowners generally approach improvements more conservatively.

https://www.rbnz.govt.nz/statistics/key-graphs/key-graph-house-price-values

New Zealand Business Confidence

Business confidence is a useful indicator of demand in the trades space, as this index reflects the optimism that business owners have that things are going to get better, or worse in the year ahead. As it stands, 50.3 percent of respondents expect general business conditions to deteriorate in the coming year.

https://tradingeconomics.com/new-zealand/business-confidence

Builderscrack “Jobs Unchased” Rate

Over the 10 years of Builderscrack’s operation, this metric has been a dependable indicator of the balance between demand (homeowners) and supply (tradespeople), not just in our system – but nationally. Generally this index ranges from 8 to 13% of jobs being unchased. Over the last year we’ve seen this index fall to around 8.3% – indicating that there is an easing of demand in the trades space. Tradespeople are looking to builderscrack for work in higher volumes.

Pricing Variability

Over the last 6 months, we’ve seen an increasing number of support tickets from homeowners confused or concerned with the price range in the quotes they’ve received. This feedback from our perspective, serves as an indicator of the varying methods, margins and cost of materials used in the quote.

Race to The Bottom

Homeowners like assurance, security, and consistency. While there are many homeowners that gravitate to the lowest price, in our experience, if the price difference between the lowest quote and highest quote is too high, homeowners lose faith in both quotes and generally reject both.

This is not good for any party.

A race to the bottom occurs as businesses, and sole traders operating in the trades space begin to sense demand easing. In an effort to solicit more work more competitively, margins or profit on the job are cut in an attempt to come in with the lowest price. By reducing margins, profits are reduced, risk is increased and in some cases, quality and deadlines can suffer.

Builderscrack wants to take this opportunity to remind business owners that not all homeowners are cost driven.

While difficult to quantify, we estimate that over half of all jobs coming into our system are from homeowners who value finish quality, working to deadlines, presentability, professionalism and other qualities over bottom line cost. Of the more cost sensitive homeowners, timely responses, professionalism, and building trust can win work – over simply coming through with the lowest quote.

We also want to remind business owners that homeowners using builderscrack have heightened levels of trust for our platform and in turn, the businesses that quote on their job through our platform. Trust is the key aspect to both builderscrack’s and your success.

In the worst cases, we are seeing homeowners walking away from our platform, and you, our tradespeople – simply because the difference in pricing is too high from the cheapest to the most expensive, in turn eroding trust.

We’re Working Hard to Find More Work For You

We work across a variety of fronts to find work for you. We invest nearly 100% of our revenue in further developing our platform and advertising across multiple channels. From online marketing to offline, appearances on The Block, newspapers and magazines and much more, we are working hard to find you work through this period of easing demand generally.

Posted In: Other

%d bloggers like this: