Southwest Airlines is one of the only profitable airlines flying these days, and one of the main reasons is their use of standards across their business. For example, Southwest operates short hop flights in secondary cities, has the quickest turn-around time in the industry and only flies one type of plane, the Boeing 737. This means they only have to worry about purchasing, maintaining, equipping, training, flying and buying parts for one kind of airplane, and it works.
Remodelers are doing the same
Over the last few years I have seen a lot of contractor advertising for fixed-price remodels; $9999 basements and $3000 kitchens come to mind. I think the idea is brilliant for a few reasons.
- You can buy, warehouse and deliver a limited inventory which drives down overall costs.
- By limiting the product, you can perform more jobs each month, which increases top line revenue.
- Any upgrades are premium-priced, which helps with margins.
- Easily marketed
- More jobs going at the same time
I have to imagine this can work outside of the remodeling category too, but you have to be a bit more creative…and willing to say no to jobs that are not part of your company’s core competency. Tough to do in a bad economy, but still an idea worth considering to some degree.
4 responses to “Remodelers: Steal a Play from the Southwest Airlines Playbook”
Now this provokes some thought to implement on my overall business strategy. Thanks Darren !
You are welcome! Thank you for stopping by and commenting! Enjoy the rest of your weekend!
-Darren
My main business is re-grading and graveling driveways and I’ve been running a fixed-price driveway special (up to 1000 sq ft) locally for about a year now. I made a deal with a local hauler to make it work. The funny thing is that I’ve only done nine of the fixed price jobs, but the ad has generated over sixty larger projects. It works!
Great point Darren. The Southwest business model also applies to your suppliers and trade partners. The more you (contractor) develop relationships and loyality by only using certain suppliers and trade partners, the more efficient your jobs will run which equals more profit.
You could probably write a year’s worth of posts on Southwest Airlines. Their core principle of “bags fly free” while other airlines are making millions by charging for bags is another example that remodelers should examine. The book, “It’s Not What You Sell, It’s What You Stand For”, by Roy Spence is an excellent book about how companies like Southwest Airlines, WalMart, BMW and others are “Driven by Purpose”.