Pipeline Workshops™: Balancing Production Home Building Efficiency with the Demand for More Choices

(We welcome Specitup’s Founder and CTO Rick Cosgrove as a guest writer on Escape from Averageness®, as Specitup invests in the capabilities of its clients through their sponsorship of Pipeline workshops™;  here, Rick reports on how one of those clients, Logan Homes, achieves remarkably high profitability by offering a highly customizable home for home buyers)

Over the past 10 years, production home builders have offered more and more plans, options and complex spec levels to create a more customized home buying experience.  A world of more and more choices is the new reality, but that new reality clashes with what we also know to be essential, finding a way to get to the right results – the right answers – faster, more effectively.

For production home builders, whether options is a profit center or a dreaded necessity, the need – or the opportunity – to offer more choices is here to stay.  The problem is maintaining control over the web of options and plans without getting bogged down, without slowing down.  Taking months to get new communities to the market and new plans into the hands of sales associates represents a significant deterrent to achieving higher velocity.

The answer is to do “more-and-better-with-less”:  Deliver more and better choices, more complete, more accurate, more useful pricing data;  deliver it more clearly, with less confusion, in less time;  deliver it faster with fewer errors, omissions, and inconsistencies;  deliver it with more clarity.

Builders are increasingly turning to Specitup to discover how to get homes and communities to market faster, in spite of more and more choices demanded by home buyers.  Better information at the builder’s fingertips is the key to balancing home building efficiency with home buyer demands.

 

In their work with home builders, SAI Consulting has brought a highly refined analytical approach to understanding how the velocity side of economic return can dramatically improve the margins and profitability of a home building company.  We agree with that thinking, which is one of the reasons we signed on as a sponsor of SAI’s Pipeline workshops™.

Pipeline workshops™ also give Specitup a unique opportunity to invest in the capabilities of our client builders, an opportunity to invest in their futures as profitable home building businesses.  And, it is an actual investment, because, in addition to sponsoring this workshop, we provide scholarships to all Specitup licensees that cover a portion of their cost to attend it.

 

In order to demonstrate Specitup’s capabilities, we recently profiled Logan Homes, an elite home builder that has invested the time it takes to master the art of maximizing profits.

Here’s their story:

Logan Homes, based in North Carolina, is among the most successful home building companies, large or small, in the U.S. today.  Remarkably, the company consistently achieves 8-10% net margins on its sale price, making it one of the most profitable builders in the U.S. on a per-start basis.

How does Logan Homes achieve such high profitability, when industry averages are around one quarter of what Logan achieves?

Simply put, it is how Logan Homes’ manages options.  D Logan, the marketing and operational mastermind behind Logan Homes, has taken a remarkably innovative approach to organizing options.  The company uses Specitup, and with Specitup, D Logan has so much flexibility in his option configuration that he can wake up with a new home design in his mind, and be able to offer that new model – fully priced out as a base model with community and series options, by the end of the day, without relying – or even involving – his CAD or Estimating departments.

Logan Homes implemented Specitup to do what every other production builder wants to do:  get control of its options, while offering a highly customizable home.  D Logan has also found that changing market dynamics is forcing him to compete at a very intense and detailed level for new buyers.

D Logan wanted to be able to fine-tune his sale price, and have so much control that he can offer as many standard options into a model as possible, while still preserving an optimum and competitive square foot cost.  That’s why he brought in Specitup.

Specitup is an ideal tool for just this type of competitive market options management.  And, here’s why:  because Specitup can be used to manage option tiers and configurations to an extremely granular level, adjusting and optimizing the home to the lot-specific level, to make sure the house is extremely competitive in pricing, and in the options it offers as standard and as upgrades.

D Logan says, “With Specitup, I can very quickly option-out that house with the standard options that my competitor is offering for his $300,000.  If I find I can add more standard options, and still make a profit – Specitup will tell me – then I’ve got a real advantage, because the customers notice that stuff.”

D Logan can configure Specitup so quickly that he regularly creates a “spec’d up” house on the fly when he is deciding what he should pay for lots.  And he doesn’t have to pick up the phone to call in his estimators or his CAD team to create BIM models.

“If I can’t compete, Specitup has told me that ahead of time, and I wouldn’t have even bought the lot.”

Learn more about Logan Homes and Specitup at www.specitup.net.

 

Come.  Participate.  Learn.

The next Pipeline workshop™ will be held at the Ponte Vedra Inn and Club, Ponte Vedra Beach, Florida, on February 28 – March 1, 2018.  The cost is $895.00 per person;  for team pricing, inquire here (flgroves@saiconsulting.com).

Delivered by SAI Consulting and Continuum Advisory Group

Sponsored by BUILDER, BuilderMT, and Specitup.

For more details:  www.buildervelocity.com