DECIPHER™ Case Study 18:
Price Optimization, Sales Analytics, Product Premium Maximization, Competitive Performance Benchmarking, Investor Reporting
Synopsis
Maximized project revenue by $700,000
Background
Since 1965, Standard Pacific Homes has been building beautiful, high-quality homes and communities in the United States. Founded and headquartered in Orange County, Calif., we primarily focus on building family oriented communities in many of the nation’s largest housing markets including California, Florida, Arizona, North Carolina, South Carolina, Texas and Colorado. With core values rooted in integrity and customer service, we have built a solid reputation as the nation’s quality-leader in homebuilding. We are committed to providing exceptionally constructed and innovatively designed homes that stand the test of time.  Moreover, our insight and understanding of how families interact within the home and our close attention to detail keeps us at the forefront of building sustainable, appealing communities for our valued homeowners. You will notice the difference from the moment you step into a Standard Pacific home.  From our responsive sales representatives, meticulous construction team, knowledgeable loan officers and dedicated customer service staff, everyone at Standard Pacific Homes takes pride in providing an outstanding home buying process each step of the way. We invite you to visit any of our neighborhoods to experience the Standard Pacific Homes difference and we look forward to the opportunity to show you what makes Standard Pacific Homes one of the nation’s leaders in customer satisfaction.
Challenge
A regional homebuilder was developing several hundred lots within the Southern California market with myriad positive and negative externalities. He was unclear regarding the valuation of individual lot premiums. After commissioning several local and regional “consultants” and receiving their inconsistent and dubious results, executives where still puzzled as to what percentage of base price to charge for each lot premium.
Solution
After several failed attempts by other “consultants” CA was given the green light to conduct a Comprehensive Base Pricing and Premium Analysis. To accurately extrapolate lot premiums for a 500+ unit master planned community which had over 25 floor plans, CA developed a customized valuation model which had the capability to grade/rank 22 unique premiums/discounts for each lot within the community. Premium/discounts included but were not limited to: Multiple Artery Ingress/Egress, Railway Exposure, Park Proximity, Community Center Proximity, Freeway Exposure – Decibel Exposure, Freeway Exposure – Visual Exposure, T-Intersection Discount, Proximity to Open Space, Cul-de-Sac Premium, Myriad View Premiums, Premium grades and values were assigned through extensive primary research, secondary research, analogue modeling, and databases with expansive samples of historical, recently sold, and active new comps and resale comps. To simplify the complexity of the analysis CA created an easy to read color coded premium heat map for each individual unit and premium/discount. This allowed the executives to assess each lot premium percentage on one easy to read map of their community. CA’s proprietary premium models are designed to maximize revenue via the calculation of numerous “premium drivers” that positively and negatively impact the revenue for each housing unit. CA typically identifies 15 to 50+ premium drivers for each “pricing study” we conduct. Premium analysis is often an overlooked area of revenue enhancement. Comprehensive premium analyses conducted by CA often uncover additional revenue that would have otherwise gone unnoticed.
Results
+$700,000 above previously projected Lot Premium Gross Revenue.
Return on Analytics
>800%
If you are interested in speaking with a client contact from this company about the work we have done with them, please contact us to submit your request and we will be happy to contact the client for you.