Building a business on remodeling savings

  • Article by: TODD NELSON , Special to the Star Tribune
  • Updated: February 26, 2012 - 11:40 AM

The Remodel Card owners aim to build their discount remodeling card business quickly here and then expand the model to other cities.

hide

Olov Strole and Chad Commers, remodeling experts and founders of the ­Remodel Card, stand in the kitchen of a Mendota Heights family who used their firm’s discount card to remodel their kitchen.

Photo: Richard Sennott, Star Tribune

CameraStar Tribune photo galleries

Cameraview larger

Remodeling experts Olov Strole and Chad Commers are offering to share what they say is one of their most valuable tools: Contractor-style discounts on home-improvement products for homeowners using their Remodel Card.

Members, they say, benefit from discounts of 20 to 50 percent on appliances, flooring, light fixtures, cabinets, countertops and other products from two dozen home-improvement retailers. And retailers gain by getting business from what the Remodel Card partners characterize as purchase-ready customers.

Members buy the card for a first-year fee of $499 and then pay $5.99 a month to continue participating.

The savings have been enough to enable some members to undertake repair or remodeling projects they otherwise could not have afforded, Strole and Commers said.

The card is a good fit for tough economic times, they said. Many homeowners interested in remodeling have less money to spend and less access to credit.

"People are on a smaller budget because loans aren't as good as they used to be," said Strole, who has run his own residential remodeling company for almost nine years.

"They might not be able to get a home improvement loan, they might not have the equity they once had," said Commers, who has bought and remodeled commercial and residential investment properties and has worked in his family's property management business. "So instead of getting everything done at once they have to chip away at it. This allows them to chip away while still receiving the discounts they really should be getting."

Contractor-style discounts, which run about 29 to 30 percent, can make the difference between launching a project or holding off, the pair say.

Swedish immigrant

Strole, a Swedish immigrant who moved to this country 13 years ago, said the idea came to him a couple of years ago.

Strole and Commers launched the company in 2010 and introduced the card last year. In between, they spent 18 months developing a website and online card purchase system and negotiating discounts with local retailers such as Warners' Stellian and Muska Lighting and national companies such as Sherwin-Williams and ABC Supply. Commers has an entrepreneurship degree from the University of St. Thomas while Strole studied business at the University of Minnesota.

Remodel Card member Craig Mueller of Dellwood said he and his wife saved $2,500 on carpet alone as they used the card as part of a larger remodeling project that also included updating a bathroom. Worries about getting a lower level of service because they were using the card quickly proved unfounded.

"We were able to do custom work with a large tile provider and get some professional advice," Mueller said. Not only did the tile come in competitively priced but I would argue one of the biggest values was the advice that we also got."

Tom Clouse, vice president/service manager of the fabrication division at Minnesota Tile and Stone, said partnering with the Remodel Card was a "no brainer" because of the additional sales volume it generates for the Minnetonka granite countertop and tile retailer.

"We get to educate the customers and the customers are happy they saved money," Clouse said. "With the economy the way it is, it's a great way to save money and be able to do some remodeling, countertops, tile, flooring, whatever. That's no investment on our end, so we had nothing to lose."

So far Strole and Commers are the company's only employees. They project revenue of $400,000 this year.

Marketing efforts include making appearances at home shows, including Minneapolis Home & Garden Show, running Feb. 29 to March 4 at the Minneapolis Convention Center.

30 percent discounts

Strole and Commers hope to build local membership as quickly as possible this year and will look to expand to other cities beginning next year. They're also approaching major Twin Cities employers who could offer the card to employees transferring here.

The average savings on projects so far has been 29 percent, Commers said. He offered this example to illustrate the Remodel Card's potential savings: A member who buys $2,000 in products would save $600 with the average discount of about 29 to 30 percent. That $600 in savings would pay for the Remodel Card's first-year charge with $100 to spare.

"If they're spending $2,000 or more -- carpeting in a basement, carpeting in a family room -- they're going to see a benefit above and beyond the cost of the card," Commers said, based on the average discount members have experienced to date.

While the discount varies among retailers, it typically applies to everything in the store, with some exceptions for appliances, Commers said.

The expert says: Alec Johnson, associate professor in the entrepreneurship department at the University of St. Thomas' Opus College of Business, said Strole and Commers, his former student, have come up with a business that has "an interesting, strong value proposition for all the stakeholders."

The challenge, Johnson said, will be whether members continue using the card -- and paying the monthly fee -- after their first big remodeling project or two. 

"There's a huge value proposition but it's short-lived, I think. It's an unknown but they've set themselves up well to figure that out. If they can prove that piece is lucrative, then they've got a heck of a business."

Todd Nelson is a freelance writer in Woodbury. His e-mail address is todd_nelson@mac.com

  • related content

  • THE REMODEL CARD

    Friday February 24, 2012

    Business: Buying service enables members to purchase appliances, flooring, cabinets, countertops and other products at what the company describes as pre-negotiated, contractor prices from two dozen local and national home-improvement...

  • get related content delivered to your inbox

  • manage my email subscriptions

ADVERTISEMENT

Connect with twitterConnect with facebookConnect with Google+Connect with PinterestConnect with PinterestConnect with RssfeedConnect with email newsletters

ADVERTISEMENT

Advertisement
Golden Gavel by Star Tribune

Countdown to great deals

Bid Sept. 21-29

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

 
Close