Since the start of the pandemic, the price for construction materials has increased 33%. That includes an 8% increase in the first three months of 2022. Increasing prices have caused the industry to slow down a bit, as owners put projects on hold due to sticker shock and lack of materials. This has put more pressure on building materials suppliers to market and sell their materials over customers’ price concerns.
The concerns are real
Inflation has affected everyone. The consumer price index increased 8.6% from May 2021 to May 2022, which is the largest 12-month increase since December 1981. And in June 2022, the national average price for regular gasoline reached $5 a gallon, which is the highest it’s been in 14 years.
Construction materials pricing has been increasing over the last couple of years due to the effects of the pandemic and supply chain and labor shortages. Pandemic shutdowns caused manufacturing to slow, and the lack of truck drivers and construction labor has further affected the availability and price of building materials. Lumber prices alone rose over 300%, and many other materials weren’t far behind.
Experts expect prices to continue to remain volatile, at least for the short term. This means owners and architects will continue to question higher prices, and manufacturers and distributors will have to defend their prices. Unfortunately, distributors are often at a loss when manufacturers increase their prices without notice. Saying that prices are high “just because” is not going to go over well. You can still make the sale, but you have to make a strong case for why your product is worth it.
Explain your product’s value in different ways
The key to overcoming client price concerns lies in educating them about the value of your product. By showing architects and owners how valuable and useful the product is, you can make the decision to buy easier. There are a few ways you can show your product’s value in your marketing materials:
ROI
Educate end-users about the financial benefits of your product, or its return on investment (ROI). Potential data points include maintenance cost savings, avoiding repair and replacement costs, or savings on other materials or equipment that aren’t needed or can be reduced or value-engineered because of your product.
Lifetime cost
This is similar to ROI but includes costs over the lifetime of the product. Lifetime costs should include material purchase, installation, maintenance, repair, and disposal at the end of its useful life. Once these costs have been established, amortize them over the expected useful life of the product to show a cost for each year. This is similar to the concept of cost per wear in clothing. The cost of a garment is divided by the number of times it will be worn to determine if the garment is worth purchasing.
Profitability
Include ways that the product will help the owner grow their revenue. For example, a product may make a multi-family building more attractive to owners or renters, which means the owner can charge more and fill the units quickly. In another example, a product may make a commercial office building more flexible, leading to higher lease rates.
Project certifications or credits
If your product helps projects earn building certification or tax credits, include this information in your marketing materials. For example, if your product contributes toward LEED certification, you can assign a value to the building achieving that certification. If certification is a project requirement, marketing your product as an option becomes even more straightforward.
Compare with others
Compare your product to others of similar purpose to show the value you are offering. If a competitor’s product is more expensive than yours, you can break down the costs for the client and explain how yours delivers a better ROI.
Include testimonials
Providing testimonials from customers who experienced your product is invaluable in helping new customers see the value in paying more for your product. You can include quotes from project owners, architects, contractors, and other end-users.
Use visuals
Include visual media, like photos and videos, in your marketing collateral to showcase your product. The goal should be to give a potential client the experience of seeing the product in action, including installation and maintenance.
How it’s made
Often the process of design and manufacture of a product is kept behind a proverbial curtain. Lifting the curtain, showing the effort, time, and resources that go into the product, can go a long way toward making a customer more comfortable with the price. For example, luxury goods company Hermes has successfully commissioned videos and articles about how their bags are made and why they’re so expensive.
Aspiration and competition
If your product has been used in projects or by owners that your customer aspires to be like or is in direct competition with, pointing this out may make them more likely to use your product. We all want to “keep up with the Joneses,” and this can be used to convince customers to buy your products.
Warranties and maintenance
If your product comes with extended warranties, routine or preventative maintenance, or other bonus services, assign each one a cost value and use those to show the actual worth of your product. By adding in these extras, your product will be seen as the more attractive option.
Educate your buyer
Once you’ve determined the information you want to use to explain the value of your product, develop product marketing collateral to help educate architects, owners, and contractors on the benefits and costs of your materials. The simplest way to do this is with a quick reference sheet that can be downloaded from your website. You can also develop a short slide deck that explains the benefits and the value of your product.
Focus on your customer
As in any marketing campaign, your focus should remain on your customer and their needs. You can help customers overcome the sticker shock caused by high building materials prices by focusing on what they care about and explaining how your product meets their needs.
