The prefab business is booming – and for good reason. The combination of affordability and fast production makes the modular home industry extremely appealing to customers. As an entrepreneur, it’s easy to see the appeal. But what does it take to succeed in the modular home industry?
To get started, follow the steps outlined below.
1. A Well-Conceived Business Plan
A thorough business plan is necessary in any industry – and modular homes are no exception. A business plan should include a description of your business, goals, marketing strategies, sources of materials, and financial information.
Your plan shouldn’t include any assumptions about where your resources will come from – so do your research. The difference between prefabricated modular and mobile homes is huge in this case, because mobile homes depreciate in value over time. Modular homes appreciate value similarly to conventional homes, so lenders may be more likely to offer financing.
Finally, get a sense of the sources of materials and equipment you’ll need, as well as how much it will cost. The same kind of product from two different suppliers may be wildly different in quality. Furthermore, raw materials often fluctuate in price, so today’s cost of steel may be different from the cost six months from now. You may have to consider alternatives to desired materials, like the more affordable bamboo instead of timber or wood paneling.
2. Accurate Market Research
What are the needs and wants of customers in the areas you plan to serve? There’s a particular niche that modular homes serve. The combination of affordability and speed of construction makes the prefab business highly appealing, but you’ll need to assess other factors – like whether your potential clients already own land. Generally speaking, the buyer must already own the land on which a prefabricated home is placed.
Get a sense of your local and regional competition as well. Modular homes are unique because they can travel long distances and be assembled onsite, but remember that some buyers may want to source materials locally to reduce the strain on the environment.
3. Startup Logistics
All startups have to go through a number of steps with local and national officials. Register your business with the IRS and get proper licensing and permits in place, as well as any documentation you’ll need for clearance from port authorities and other shipping entities.
You’ll also need to spend time hiring contractors, subcontractors, and other staff members. It’s fine to just start with a few contractors, but know that you’ll have to hire more people once your business gets up and running. You’ll also need an administrative team – like billing staff, customer service representatives, and HR managers, among others. You may want to start by outsourcing some of your staff, especially if you don’t have the funds or experience to handle the hiring and placement process.
4. Accurate and Competitive Pricing
The modular home business may seem comparatively simple, especially when you take other real estate into account. While most new homes require the work of an architect and design team, modular homes are often nearly identical in design.
Modular homes have more variations in design than you might think, however. Many different sources will give you wildly varied quotes, ranging anywhere from $50 per square foot to more than double that amount. Depending on which features the client wants or doesn’t want, the final home will almost always exceed the base price quote.
Here’s a quick breakdown of different levels of pricing in the modular home business.
- Base price
The base price only includes the cost of manufacturing the home according to the most basic plan – without any customizations or alterations. This won’t include the cost of delivery, onsite labor, or anything else.
- Custom price
Clients usually want to know about custom finishes and other additions, like garages or attics. Providing an accurate quote is still quite simple, but again, this price only includes onsite manufacturing costs – no transport, delivery, or other labor.
- Setup and delivery price
When quoting the price of a modular home that includes setup and delivery, a client will likely assume that the quote will be all-inclusive – but setup isn’t the same as being finished. This price won’t include the cost of utility installation, touchups, or even the cost of building the foundation for the home.
- Final price
This is the highest price you can give your clients, because it includes all of the above prices as well as an estimate for site prep, pouring foundation, utilities, setting the module, and any other touchups. This cost will also include taxes, fees, and more – and can be more than twice the initial price for the bare-bones modular building.
Why such a major discrepancy? Providing an accurate quote is critical, and it can help to let customers know where the numbers are coming from. For example, the final value of the project varies greatly depending on the location of the home site, the cost of prepping the build site, the distance the modular home will need to travel, and other factors.
With so many factors going into the final cost for a build, providing an accurate quote is more important than ever. Potential clients will be looking at your business’ pricing and features and comparing them with competitors. Full pricing transparency will almost certainly give you an edge, which is where configure-price-quote (CPQ) software can help.
Choose CPQ Software from iQuoteXpress
Are you ready to find out what CPQ software can do for your modular home business? At iQuoteXpress, our software improves efficiency by almost 75 percent – meaning that your modular home salesperson can easily create a proposal by choosing relevant items from an online catalog. Include product photos and diagrams, marketing support material, and more.
Our proposal automation software is practically foolproof, so even your newest agents can provide the quality your business is proud to stand behind – allowing you to focus on your modular home business rather than preparing sales-related documents.
For more information about our software, contact us today. We’ll happily send you a free, no-obligation demo so you experience the features of iQuoteXpress for yourself.
We look forward to hearing from you.