In June of this year, Betenbough Homes lowered our prices in Midland by an average of $3,000 per home at a time when we had more than 100 customers on a waiting list for a Betenbough home…AT THE HIGHER PRICE. Why would we do such a thing?
Cal Zant, president of Betenbough Homes, explains that we are a cost-plus builder. To us that means we establish a reasonable margin, calculate our hard costs (without including overhead), and then add the margin to determine the price of each home. Unlike most other builders, we never set prices by asking what the market is willing to pay.
When our costs go up, the prices of our homes go up. If we’re truly a cost-plus builder, that formula should work both ways. So, when our costs go down, the prices of our homes should also go down.
Most businesses operate in terms of “profit optimization,” which would mean we raise home prices until we don’t have a waiting list for our homes. But greed would be the motive behind that decision. Some might say, “Don’t lower prices because costs could go up next month.” But fear would be the motive behind that decision. The truth is, after lowering home prices in Midland, we were still making a reasonable profit, and our trade partners were still well-paid.
Over the 30+ years we’ve been building homes, Betenbough Homes has lowered prices multiple times. You might assume our home buyers would be thrilled to receive news that their purchase is costing thousands less than they expected. But that’s not usually the case.
Customers consistently meet this kind of news with skepticism or even cynicism. They wonder what might be wrong with the market. They assume we messed up or are trying to shortchange them in some way. We’ve even had some home buyers cancel agreements after these phone calls. They just can’t believe a business would have this kind of integrity. Cal says, “I can’t blame them. Apart from Jesus, this kind of altruism doesn’t exist.”
Kalee Rich, director of sales support for Betenbough Homes, says that her team provides messaging to equip the sales associates for those phone calls, and they role play to prepare. The sales team is always so excited to share this good news with their home buyers, and being met with suspicion instead of gratitude can be discouraging.
So why, especially knowing the undeserved negativity it will bring, would Betenbough Homes lower home prices when the market supports our current pricing? Cal acknowledges that it is kind of crazy!
Kalee explains it this way, “The Lord has told us what enough looks like. This is at the heart of who we are. If we find savings, we pass it along. That’s what the Lord has asked us to do.”
In the many times Cal has been part of lowering prices at Betenbough Homes, he had NEVER heard of a customer being appreciative…until this time. Thalita Silvestrini da Silva, new home sales associate in Midland, received a text message from a home buyer reacting to the news of the price decrease. The home buyer expressed her gratitude for the price reduction, and she prayed the blessing would be returned to the Betenbough Homes team.
Cal shares that we could’ve only lowered prices for new agreements being created. “How would you feel if you had bought a home a few weeks ago and then saw the same floor plan was on the website for $3,000 less than you are paying?” Cal asks. So we lowered the price on the Midland homes under agreement, as well. In Cal’s words, “This is what loving your neighbor as yourself looks like in the middle of a business.” It’s being just as concerned with the customer’s perspective as we are about our own perspective. It’s doing the right thing even if we won’t be thanked.
The decision to lower home prices in Midland isn’t a story of our team going “above and beyond.” This price reduction was a normal part of our day-today operations. Stories like this showcase how our company culture affects our business decisions.
“If Jesus had been in that meeting, this is what he would’ve suggested. And we can totally do it.”
– Cal Zant
