It’s a common story: The homeowners want you to build them a pool, and they can’t wait to see the design you create. After initial conversations, you spend additional hours driving to the site, taking measurements and shooting elevations, then more time churning out a presentable design and putting together a careful proposal. You make a good effort, but you don’t get the job after all; nine times out of ten it goes to a low bidder. And what do you have to show for your effort?
We posed this quandary to a couple of pool builders who, several years ago, made the leap and started charging for design services and now incorporate design as a regular element of their successful businesses.
“This is a burning issue for builders in a lot of markets, especially those areas that are acutely price-driven” says Dennis Loebs, one of the two pool builders we spoke with for this article. “I go to conferences with builders from around the country and I hear a lot of people complain that their competitors are giving design work away for free, which makes it hard for them to monetize their own design products. And that’s a real tough nut, it really is.”
Loebs’ company, Loebs + Gordon Poolcraft, operates in the Hamptons, on Long Island — the high end of the high end — where clients typically hail from the financial and entertainment industries. The company builds about a dozen pools a year, at an average cost north of $300,000. “Over the years our model has become increasingly business-to-business, in that we deal with contractors and architects rather than directly with the homeowners,” says Loebs. “It’s kind of a word-of-mouth network, in a niche market we started targeting 15 years ago.”
In 2011, the company spun off a separate entity, Blue Square Design Group, where Loebs now focuses his time. “We had done a couple of design consulting jobs for some New York City architects, and it became kind of apparent that if we were going to pursue outside markets — that is, for customers who we weren’t building for — that we were going to have to create a new entity. It has the additional benefit that it has created a bit of a wall conceptually between the construction part of the business and the design part. So now, if an architect or contractor wants our help on the design, they still feel they’re able to seek other bids for construction.”
That said, Loebs + Gordon end up building about 75 percent of Blue Square’s design jobs. Last year, its first full year in business, the design group did about $170,000 — a volume “representative of a startup,” says Loebs. “We expect to keep tweaking the business model.”
Given the peculiarities of his high-end niche, Loebs is hesitant to advise pool builders in other markets about how to break into paid design work. “Since we’re always working with a team of architects, the key design decisions about what the pool is going to look like have already been made. Our role is more technical. We fill in the blanks between the architect’s vision and the point where you’ve got a set of construction drawings that you can actually hand to someone and say, ‘Here, build this.’ We’re the bridge to the construction, basically.”
Though he’s not comfortable extrapolating general lessons, Loebs offers one bit of perhaps counterintuitive advice for builders in cost-driven markets where free design is the expected business practice. “If none of your competitors are charging for design, that’s a big problem, but maybe also a big opportunity. The opportunity is that you’ve got a way to differentiate yourself — with professional design. But I think that works only as long as your product is also distinguishable from everybody else’s. As long as you’re offering the same level of work as everyone else, then you probably can’t give a client any additional value by charging for the design.”
Differentiation was in fact a driving force in Blue Square’s choice of design software. “A consistent theme in both our construction practice and our design practice is to always trying to distinguish our work from everyone else’s. One of the ways we do that is to use a different software, Autodesk Inventor — it’s a very different animal from, say, Pool Studio, which so many other guys are using.” Inventor is clearly not for everyone: It’s expensive and has a steep learning curve. But Loebs has found its 3D modeling features indispensable. “At the high-end, most of the equipment is being installed in some kind of indoor space, whether the basement or a vault. It’s not as simple as a regular installation where the equipment is on an exterior pad. We may be given 125 cubic feet to install the equipment for a 2,000-square-foot pool. Figure that one out! You’ve got to be able to identify exactly where every piece of equipment is going, the exact size of every pipe and where it’s going to pass through the wall — it all has to be known beforehand. It’s virtually impossible to do that in these tight spaces without using a parametric modeling program.”
Christopher Anderson joined Custom Design Pools in 2006. At the time, his father, Bob Anderson, who started the company in 1994, was wearing most of the hats — sales, construction management, customer service — while building pools in the $65,000 to $70,000 range. Sharing the load, father and son began to take on larger jobs, and Christopher began to flex his design muscles.
“I found that I enjoyed not just building the pool but doing the design for the entire backyard — the landscaping, the arbors, the terraces and porches — the whole nine yards.”
Using subcontractors, the company was able to take on larger jobs, today doing 15 to 20 projects a year and an average annual volume of $2 to $3 million. “I like doing fewer, but larger, jobs because it means I can spend more time with each client.”
Anderson uses Pool Studio and VizTerra, the companion landscaping software, for his design work. “The 3D program lets the homeowners see exactly what they’re going to get. It eliminates the possibility that when I start building the project, the customer is going to come out and say, ‘That’s not what I had in mind.’ I can adjust the elevations in the drawing to be exactly what they are in the yard. So if we’re discussing the steps from the landing to the terrace, I can nail it exactly; I can show them to the inch what the risers are going to be. Those details matter. Let’s say I’m showing 7-inch risers, but the homeowners say, ‘Our grandmother is going to be using the space so we really need something lower.’ It saves a lot of money and prevents a lot of stress when you can review and adjust those details ahead of time, as opposed to, say, having to tear out the forms and start over when the problem arises during construction.”
For Anderson, design and sales are inextricably linked, and he’s passionate about his belief that pool builders should charge for their design services — not just for profit, but because the financial arrangement improves the relationship between the customer and the builder, and thus the outcome of the project. Anderson uses a recent sales call to illustrate the point.
“I met with a couple who had just a purchased a $600,000 house on the water in Clear Lake, south of Houston. After about a half hour of looking at my design work and job photos, they surprised me by turning on their computer, pulling up another pool builder’s design proposal, and asking me what I thought of it. I was careful with what I said — simply that everyone brings their own approach to the design, something like that. It wasn’t a bad design, but it lacked finishing touches.”
As it turned out, the couple had already met with three pool contractors, and were waiting on designs from the other two. Ordinarily, the realization that you’re following on the heels of three other builders might not bode well, but Anderson sensed an opportunity.
“What was clear to me is that this builder had driven out and spent time with the couple, then gone back to his office and taken the trouble to draw up a design. But then, believe it or not, he didn’t drive back and sit down with the couple to go over it, but just emailed it to them to review! The problem is he’s missing an opportunity to explain his design, and to hear from them what they do and don’t like about it so he can go back and make the changes.”
Anderson is pretty sure he knows why this builder dropped the ball. “If he were charging a design fee, he probably would have gone back to the house, and taken the design process a little more seriously. Instead, what happens is the homeowners, because they’re not paying for design, don’t feel any obligation to give feedback. If they don’t like what they see, they just move on to the next contractor’s design. Too often, the homeowners are afraid of hurting someone’s feelings. But unfortunately this builder will never find out why he didn’t get the job.”
A design fee, according to Anderson, creates a two-way relationship that benefits both parties. “If I’m charging for my design, I feel obligated to deliver my best work. Whereas if I’m giving it away for free, I’m more likely to sit down and quickly work something up just to get it done.”
At the sales call, Anderson explained his own approach to design, which involves asking a lot of questions to make sure the customers are getting the pool they want, while at the same time educating them about design options they may not be aware of. “None of the other builders had showed them this much attention. So at the end of the session, when I offered to do a design for $1000, they agreed — even though they had already met with three other builders who were offering free design.”
Anderson typically charges from $750 to $1500 for a design, getting half the fee up front and applying the second half to the cost of construction. In cases where the company doesn’t get the construction contract, most clients readily pay the remainder of the design fee. In return they get perspective drawings, construction plans, and itemized equipment specifications — enabling them to get apples-to-apples quotes if they choose to put the project out to bid.
Obviously, not every prospective client is immediately willing to pay for design. “Sometimes when I tell them I charge, the customer will back away,” says Anderson. “They’ll mention that other builders are doing their designs for free and would like to hold off until they hear back from the other guys. But then, in a few weeks, more than half of these homeowners will call me back and agree to the fee — because I’ve described a higher level of service than the other guys.”