The downside of being the bigger Exporter of Prefab Houses in EU – a Warning to Customers: avoid low prices and cheap solutions
In a press release of early May 2014, Äripäev and Postimees (two major Estonian Newspapers) reported the news that Estonia is today the biggest Exporter of prefabricated wooden houses in EU.
The news was fed to Newspapers by Puitmajaliit (Estonian Woodenhouse Association) and it does not come as a surprise given the long history of this small Country in the wooden construction sector and the determination of Estonians to always get a first place in EU statistics.
Requirements for Energy performance of building are becoming more strict evey year and this brought to a quick growth in the demand of prefabricated wooden houses. Although this is very positive for Estonia and for European economy in general, every gold rush comes with casualties… and in this case casualties will most likely be on the side of Customers.
Everyone is a Producer
Things are going well in the Wooden Homes Market so everyone wants to get his own share.
In the past years we have seen the establishment of many new Companies in this field and we have seen many Producers of log houses switching to element houses.
It is evident that Owners are trying to turn their buisness in the most profitable direction… and that is fine, no harm with that.
More competitors on the Market result in a wider choice of Products for Customers and in lower prices. Although this is a positive effect, we start feeling something is wrong when we see price dumping.
Price dumping is never good.
Dumping the price lower than Factory cost is a subtle technique to attract new Customers providing a false impression of being the most efficient Company on the Market.
Companies who practice price dumping will usually turn the situation in their favor by including in the Contract clauses that allow for price raise (unforeseen quantities/circumstances).
In most cases the politics of price dumping cannot be kept going for long: the Company will either go back to regular prices (or higher!) with an increased portfolio of Clients or it will simply go bankrupt.
The real risk for the Customer is that the Company could go bankrupt before his house is completed. This would destroy the Customer and put the whole Industry in a very bad light.
Be a Smart Customer
So, in a Market where there are so many players, how can the Customer protect himself from assuming high risks while still spending a reasonable sum for building his dream home?
Here is a simple guideline everyone should follow to make sure they make it to the finish line:
1) ask for more that one Price Offer. They say you should get at least three Price Offers, we would suggest you put some more effort in it and you go for five;
2) never choose the cheapest option. This is math basics: cheapest and more expensive options should be always discarded if they are sensibly different from the rest of the options. So, in most of the cases you will be left now with three choices (having requested five Price Offers);
3) evaluate quality and quantity of Goods and Services offered. Often different prices simply come from different Products. Never assume that different Producers are giving you the very same Product! …verify, ask, check, double-check!
4) evaluate the references. Has this Company done business in your Country before? …what about your area? …ask from previous Clients. What is their final opinion about this Supplier?
5) get information on the financial status of the Company. Is it financially Sound? …does it have a history showing growth? …or decline?
6) get to know the people inside the Company. You will have to deal with them later anyway. Make sure you can communicate with them and you can trust them.
7) ASK FOR THE CONTRACT! …yeah, big letters. A Price Offer tells you nothing if no rules are set for the implementation of the Works. In order to see the full picture you have to compare the Contracts. Restrictions, procedures, responsibilities, terms of payment… all these elements are vital for your final decision. A smooth implementation of the Contract is worth much more that a few thousands euro.
Seven simple rules to save your Project, your time and your money from a possible disaster.
What about Qhaus?
In the very same press articles mentioned in the beginning, Qhaus was reported as an example of fast growing Company in the sector of Prefabricated Wooden Houses.
Needless to say, we are extremely proud of this result and, in the scope of this short article, we point out that our 57% growth is surely not the result of a price dumping action. On the contrary, it is consequence of an accurate planning of processes and resource, of a sound collaboration with trusty Partners and loyal Customers that invested in a long term relationship with us.