Jim Kuenzi has seen how new-pool prices
have dropped, and he’s had enough.
Several months ago, the high-end builder decided to pull out of
construction for a few months until the bidding-war dust settles
and he feels like he can make a decent living building the way he
believes is right.
“I could see reducing my prices 5 percent, but I
can’t see 20 percent,” says the president/owner of
Corinthian Pools in Benicia, Calif. “I don’t think that
leaves much margin for error.”
His decision is partially grounded in principle. “The only
way for me to be able to get down to that level would be to change
my building technique,” he says. “And I’m not
willing to compromise the quality that went into my
The discouragement is widespread. Many builders report that
their own price per pool is between 5- and 10 percent lower than
before the economic downturn. But they find themselves competing
with others charging 20 percent less.
“The jobs almost go up on an auction for what you can do
them for,” says Steve Chandler, president of Custom Pools
& Patio in Boise, Idaho.
And the high-end market is not immune. “You may sit down
with somebody who says that they want to buy quality, and there may
be three quality builders at the table,” says Steve Toth,
owner of Acclaim Pools, LLC in The Woodlands, Texas. “But
then [the homeowner] knew someone who knew someone who knew someone
who used this other pool builder who’s not quality-oriented.
They may come up with a nice design and an excellent way of
presenting it. Before long, you may be looking at a $100,000
project, but they’re saying that this is a $60,000
Here’s what’s happening and how builders are
The change in consumers
The drop in demand and rise in consumer expectations have caused
prices to sink to astonishing levels. Ken McKenna knows this
“We just had a customer call and say, ‘You gave me a
quote two years ago for $38,000. I figure I can get it for about
half that, right?’” says the president of Tampa Bay Pools
in Brandon, Fla. “We had to explain that we’re not a
market-driven business. Pools didn’t get inflated by 50
percent [like homes did]. People don’t seem to understand
that pool prices are based on the prices of concrete, steel, pipe
The convergence of low prices and an unrelenting credit crunch
has introduced a new customer to the market — the thrifty
middle-class couple looking to reap the rewards of years of saving
by getting the pool they always wanted.
“We’re selling to nurses and police offices and
people who have maybe government jobs,” says Cecil Fraser,
owner of Swan
Pools , in Lake Forest, Calif. “They have some security in
their employment, so they can afford to do this, but they’re
doing it without financing. And people spend less when
they’re taking it out of their savings account than when
Many of these customers have legitimate concerns, and it’s
reasonable to ask for a discount. But some are so fixated on price
that they take the lowest bid, even if they know it’s risky.
“I had a client who had four bids,” says Mark Ragel,
president of Patio Pools
& Spas in Tucson, Ariz. “One was about 22 percent
lower than the lowest of the other three. He went with the lowest
guy and said, ‘I’ll take my chances. If he goes out of
business, I’ll have enough money to hire you to finish
Sometimes customers exaggerate price differences to try beating
a builder down. McKenna was infuriated once to hear that a longtime
competitor whom he respected was charging less than he could
imagine. “I called [the builder] and asked how he was doing
the job for that price,” McKenna says. “He said,
‘I’m not. [The customer] told me you
The change in the industry
A number of industry conditions have lead to the pricing crisis,
too. For starters, many subcontractors no longer get work from the
pool builders who used to employ them, so they strike out on their
own. At a time when starting a business seems inconceivable, some
individuals are doing just that.
“I know four or five who have popped up in the last
year,” McKenna says. “What you notice on the permit log
now is it’s a much longer list.”
But the lower prices don’t only come from these new firms.
Many established pool companies are drastically cutting their bids
in the hopes of picking up enough market share to see them through
Builders who have been able to review competitors’ bids
say their lowest-priced counterparts either list inferior equipment
or downgraded practices, or simply fail to specify those things at
“They’re downscaling the size of their PVC pipe,
they’re moving the pool equipment closer to the pool in an
unsightly place,” Kuenzi says. “They’re changing
their steel schedules and then changing masons, using real
standard, cheap-looking tile.”
Unfortunately, pointing these things out often doesn’t
work. “When we ask the client to bring in a quote, we
actually do an apples-to-apples comparison. We explain that in
order for this to be a fair price shop, a number of things need to
be clarified,” Ragel says. “Sure enough, they find out
that it wasn’t the same controller, it wasn’t this and
it wasn’t that. Then they say, ‘Well, you’re only
10-percent higher — but I’m not willing to pay
What to do?
Builders who can’t or won’t lowball their prices must
find other ways to compete.
When a local company goes out of business, Doug Staples will
post the information on a wall. “When we’re talking to
our clients, we can say, ‘He’s gone and he’s
gone. This is not an automobile; you can’t trade it in.
You’re stuck with it. After this many years in business, if
we didn’t give a fair product for what we charge, we
wouldn’t be here,’” says the president of
Circle Construction Co. in Tucson, Ariz.
Rather than lowering their prices, others will throw in an
optional item for free. This way, you still maintain your base
amount, even though you give something away.
For his part, Ragel, has responded by advertising low prices.
“They start out at $15,000, but nobody ever buys that. They
always want it bigger and they want more options.”
High-end builder Staples considered playing by the new pricing
rules. Earlier this year, he and his team planned to design a
template pool that would sell for about $20,000. The shell would be
built essentially the same, but it would be pre-designed and have
few extras. He abandoned the idea when he saw other builders
dropping their prices even more as the year went on.
“Whoever is the lowest, you can find somebody else in town
who’s lower that week,” he says. “I don’t
want to chase them. That doesn’t make any sense.”
Some high-end pool firms have gone in the opposite direction.
They cut prices a bit by streamlining, but now charge design fees
to help screen out serious customers.
“We’re saying $450 for a design or we’re not
going to put it together for you,” Toth says. “Everyone
says quality is important, but if you’re not willing to pay
$450 for a design fee, then it really must not be about quality
— it must be about price.”
If the homeowners hire him to build the pool, the cost is
applied to construction. If not, they have a completed set of plans
that they can use to shop around.”
This method seems to be serving Toth well. He’s gone
without a paycheck like many company owners, but his 25-percent
boost in average pool price has helped offset his nearly 50-percent
drop in volume. And his close-to-lead ratio has doubled.
Regardless of how these builders ride out the economy, they all
believe that more companies will fall by the wayside —
starting with the low bidders.
Scott Cohen isn’t shy about letting customers know just
that. When consumers hold a lower bid over his head, Cohen
doesn’t discourage them. “If it’s 20-percent
lower, I tell them, ‘See if you can get them to do it for
30-percent less,’” says the president of The Green
Scene Design & Construction , in Canoga Park, Calif.
“I want [that builder] gone. Let them take it.
“The fact is if you’re going to charge 20 percent below
market, I don’t need to worry about you for too long. I might
even get some expert witness work from your pools down the