Definetly the more you buy the better you pay. However it also goes back to your relationship with your sales rep. When I started my company, in my first year, I was getting better prices than my former boss. LOL my former boss was pissed when I told him
I try not to beat my suppliers up too badly. However this year's gonna be different. Every price increase I will force each supplier to match all the lowest prices from the other suppliers. Since we use Tamko and Certainteed various suppliers have higher or lower on each product. I hate having to worry about taking this from them and that from those.
I tend to use 3 suppliers over here, one used to get all my trade but since they put there prices up last autum i decided to shop around and it has paided dividens.
I still use the the oridginal one for small things if its the closest to the job but on the whole use the other two who treat me a whole lot better and give more discount.
I get a 2% discount if I pay by the 10th each month.
I also get an annual rebate based on volume.
They will give me special pricing for an apartment complex.
I’m not sure what kind of discount larger companies are getting but it can be a problem when they come in with a low price on an apartment complex.
I don’t now how they come up with such low prices. They could be getting a 10- 20% discount on materials; maybe they have a lower overhead % or cheaper labor. Maybe you would know. Maybe they are just not making a profit and simply want cash flow, just enough to cover some of their overhead.
Materials costs are only 25% of my entire average proposal amount.
Even if the materials were 20% cheaper, that only makes a 5 % difference on the entire proposal.
It's overhead and Desired Profit, where the prices get differentiated.
Those that cheat on the GL and WC insurance can save a bundle.
I don't get any "Special" discounts, but I do use 3 suppliers now, especially since my primary supplier was bought out by an investment firm and are tighter on their deadlines than they ever were before.
I am still in a big hole and I haven't seen an early pay 2% discount in about 2 years. But, I also, from one supplier, get all of the late fees waived, as long as I am keeping them informed and catching up.
I can't wait for my lawsuit to get over with.
Thats coming up next month, for $ 22,400.00 plus costs, interest and attorneys fees.
A few years ago there was a contractor in our market that was doing about 1500 jobs per year.
They lowered their prices so that no one could compete with them. It was frustrating to see how many jobs they were getting. I assumed they must have been getting a big discount on materials.
I eventually found out that the owner of that company had a brother that also owned a large roofing company in the area. One of the brothers married into the family that owned a major supplier. After learning that information things started to make sense.
The largest of the companies eventually went out of business. I heard that they had about $600,000 worth of unpaid bills with the supplier.
How do you compete with someone that doesn’t pay for his materials?
Why did they continue to give him credit even though he wasn’t paying his bills?
In Michigan we have a “Construction Lien Recovery Program”.
Here’s how it works. If a homeowner pays a contractor for a job and the contractor doesn’t pay for his materials the supplier can place a lien on the property.
After going through the lien process the supplier can get paid out of the “Construction Lien Recovery Fund”.
Here’s the bottom line. The supplier helped this company to get jobs at low ball prices. They allowed them to buy large quantities of material without paying for it. Then they went to the “Construction Lien Recovery Fund” and got paid.
Guess where the money comes from for this fund. It comes from the fees contractors have to pay to get a license from the state. In essence contractors have to subsidize their competitors that don’t pay their bills.
Not the same scenario, but there have been companies around here either fraudently setting up accounts, making masssive orders and disappearing.
And quite a few have just quit paying suppliers and when the supply line closed, they just shut up shop and left.
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