Builder Upgrades

The term, builder upgrades, refers to the practice of increasing the quality or level of the interior appointments. Builders sometimes use upgrades as an incentive to attract more buyers. The upgrades can be for virtually anything in the home, including better flooring, appliances, insulation packages or energy efficient heating and cooling equipment. When builders plan a housing development, they often target a particular market segment. They use demographic analysis to find the age and income levels for their market. Then they choose the standard features based on how much they believe the customers can afford. Using upgrades as an incentive leverages the builder’s budget because they typically mark up the upgrades. They buy the upgrades at wholesale cost and sell to buyers at retail. For example, they may advertise $10,000 in upgrades, while their actual cost may be $5,000.