Cost-Plus Initative

 The Cost-Plus Customer Initiative

Timeline: September 2023 - Present • Role: UX Research, UX & Visual Design

In Q4 of 2023, Buildertrend’s design and company leadership made an informed choice to shift the focus of our work to develop better workflows and processes for our cost-plus builder segment.

While previously focusing on our other user persona (fixed-price builders), it became very clear that when using data like NPS scores, the biggest gripes for usability and a product that didn’t “fit” came from this user segment.

While cost-plus builders only account for a reported 25%-30% of our primary user base, we recognized that without this renewed focus on their pain points, we would continue to not only churn these builders but lose the opportunity to convert them in the future. (hello, survivorship bias)

(Read Less) The TL; DR

Buildertrend’s financial team made a new initiative to focus on cost-plus builders. These builders charge their customers for the flat cost of time + materials with an additional markup. Utilizing past and concurrent research, we identified three key opportunity spaces that were assigned to three separate scrum teams.

Within our team’s opportunity space (★ Easier Invoice Creation and Customization), we chose to focus on (3) pain points:

• Allow users to add time clock to invoices.

• Pulling attachments when importing items to invoices.

• Adding Quickbooks functionality.

Click any of these three links to view case studies for each individual user goal ↑

To read more about the surrounding problem background before proceeding, continue below ↓

(Read More) User & Problem Space Background

What is a Cost-Plus contract?

Cost-plus, also referred to as “open book” pricing, is a financial agreement used in construction projects in which a client pays all the actual costs for construction of their home. Unlike fixed-price contracts, open book contracts will charge clients their actual costs plus a previously agreed-upon percentage or flat fee markup on materials and labor. Most importantly, the clients on these projects can see these margins and all costs associated with the project.

Why do builders use Cost-Plus?

Builders use cost plus pricing to alleviate the financial burden they carry with fixed price contracts. Cost plus contracts ensure profitability for the builders performing the work. When material and labor prices are fluctuating rapidly and the scope of a project's work is flexible, builders can protect themselves by avoiding a fixed price contract for a project.

Cost-plus contracts are particularly useful when design plans are still under development, or when a builder wants to build trust through transparent billing practices. However, they require much more stringent record keeping than fixed-price contracts.

Identifying User Needs & Opportunity Areas

Using a mix of research methods (surveys, CS feedback, and direct interviews) we identified that the quarter of our base creating these contracts value the following attributes in our product:

1. More Control Over the Homeowner Experience: Homeowners on cost plus projects require more transparency on their projects than fixed price projects do. Since the homeowners are only paying for the price of the project + the fee or % they agreed to with their builder, they have more interest in the project's budget, what they are getting invoiced for, and how/why the cost of their project is changing. Builders need to supply these details to their homeowners and many would prefer to do this through the homeowner portal if it was possible.

2. ★ Easier Invoice Creation and Customization: Each invoice in on a cost plus project is calculated uniquely. Cost plus builders typically invoice homeowners for a variety of costs; labor costs, material costs, subcontractor fees, site costs (like dumpster rentals, security, fencing, etc), and sometimes overhead costs. It needs to be easy for users to pull these costs in, get proof of these costs (like receipts and bills), and then easily share the right information from it with the homeowner so the relationship stays transparent.

3. Better Homeowner Price Tracking: Cost plus builders typically share a version of their budget with their customers. By tracking this, homeowners and builders can easily gauge how their selections and changes in scope will affect the customers final price of the project. Because all costs incurred effect the owners price (and project’s profitability), cost plus users tend to update budgets in real time.

★ Each one of these 3 problem areas was assigned to a scrum team inside of the initiative, and our team tackled #2.

Easier Invoicing: The Current vs. Desired Workflow

Setting out to improve invoice creation, the next task was to layout the general journey of a user creating an invoice and sending it to their homeowner. The left is currently in our application, and on the right is a more abstract and desired state.

Research & Pain Points

We identified a few specific pain points that we could commit to solved for ★ Easier Invoice Creation and Customization:

1. Allow users to add time clock to invoices. Many builders noted that where they can normally import data from Buildertrend entities like bills, when their employees clock into Buildertrend, those hours cannot be added to the invoice. This leaves them to manually calculate what could be hours of work, the rate, and the final cost. Read More

   • 1a. Grouping line items by cost code. When users are organizing their invoices, they don’t want line items coming over one, by one, by one… and having their invoices be 6 pages long. Read More

2. Pulling attachments from entities when line items are pulled to invoices. When builders are importing information from bills to their invoices, they want the attachments on the bills to come along without any manual effort on their part. Read More

3. Adding additional Quickbooks functionality. Buildertrend syncs with Quickbooks so that Quickbooks costs (like bills and expenses) are represented on their budget and can be invoiced directly through Buildertrend. Read More

At Bat: Time Clock Invoicing

Head back to the link below to read more on the first problem space we undertook.