Now that the Internet has made pricing so transparent, it gets even more frustrating to walk into a local supply house and realize that you are not getting the same deal that contractors get.
- Any tricks on how best to get "contractor discounts" from the local suppy house?
- How big are the discounts typically to their parallel off-the-street retail (not list) price?
- Is the discount typically the same for plumbing vs. electrical vs. building materials vs. gardening/landscaping, etc.?
- What about for "finished" fixtures (e.g., lamps, fawcetts, cabinets) vs. basic materials (e.g., wire, pipe, lumber)?
Register as a business, get the proper tax ID number and do the reporting required by licensed businesses. Some suppliers require a minimum purchase per order or per year to qualify. I can take you to places that will not even let you in the showroom unless you are a contractor or are with a contractor.
Do a decent volume of business with them over a period of six to 18 months so that they know you're really a contractor and not just somebody looking for a ride.
What your asking here is how to get a contractor's discount on product and not be a contractor. First let me tell you a little secret here. If you get a wholesale warehouse to sell to you as a customer / John Q. Public at contractor's rates and the other contractors find out about it. Your going to cost that warehouse about a 100 times in lost sales to real contractor that they would ever hope to sell to you. If they sold you say $500.00 of wholesale goods they would loose about $50,000.00 to $500,000.00 worth of equipment that the contractor would have bought without knowing about the sale to you. The Wholesale suppliers would have to be water headed to sell to you with that big of a lost they are looking at.
Nothing is free in this world ! Go get you a contractor licences, Contractor Liability insurance, and a Sales tax number and start buying wholesale. You can then brag about being a wholesale buyer and everybody will be happy. I buy maybe $300K of wholesale goods in my HVAC business a year and get a pretty good discount. If you could buy say $10K of good from them a year. They would give you pretty close to my discount on goods. The more you buy the more the discount grows.
The only other choice it to suck up to a contractor and let you buy off his account for a discount.
This is one of the most ridiculous things I have ever heard, more reminiscent of the old Soviet system than the current Internet-enabled world with ever more transparent and competitive pricing.
Why would the contractor care (other than indirectly) if I saved a couple of dollars on a project that I am going to do myself anyway, particularly if I could always get the items at the same or better pricing on the Internet or maybe even at Home Depot?
In fact, I would turn your argument on its face -- if a contractor is getting good service, selection, and pricing at his/her current supplier, why would he ever consider risking pricing and service on $500,000 of spend just because I saved a couple of dimes on some switch or a couple of bucks on some fixture.
Globalization, the Internet, and increasing competition are changing the face of business forever, making pricing more competitive and transparent than ever before. Now that pricing can be looked up and compared on the Internet, it is a lot harder for suppliers to price discriminate between retail and wholesale customers except on the basis of true volume efficiencies (e.g., buying pallets or cases) or when the purchaser has dominant purchasing power (think Walmart). The differential between wholesale and retail pricing erodes as big box retailers push down the retail price while Internet-suppliers (and others) allow individuals access to contractor-like pricing. Those who can't adapt to this reality are not going to survive.
Each supplier is free to decide what discount is required to maximize its profit (volume x margin). If a supplier believes that selling to enough people like me at a discount brings them more profit and prevents me from going to the Home Center or Internet then by all means they should sell to me at or near the contractor discount. If they believe that they need to give you more of a discount to retain your business or that you are cheaper to serve due to your volume then maybe you will get a bigger discount. However, in this day of multi-billion dollar purchasers (like Walmart), your power as a volume buyer is a lot closer to my thousands of dollars a year than to Home Depot or Walmart's purchasing power.
Finally, from a "moral" viewpoint, I have always thought it to be borderline sleazy that contractors make an additional *hidden* margin by marking up the price of materials. I am happy to pay a fair and competitive hourly labor rate and to pay a delivery charge on materials, but I fail to see why a contractor should make an additional hidden profit by marking up materials due to the old "cozy" relationship between suppliers and contractors. I now use the Internet all the time to challenge contractors on marked-up materials pricing thereby avoiding being gouged and getting a better sense of my labor vs. materials cost. In fact, this is no different from the uproar over hospitals marking up the price of Tylenol (beyond the cost of goods and administration) or government contractors marking up the cost of toilet seats.
Sounds like you have a case of bitterness here. If I can get contractor-like pricing without doing the above than all the power to me. Since you weren't going to get that business from me anyway, it doesn't really hurt you, except perhaps your ego that some "layman" like me is getting competitive pricing without belonging to the "guild".
That is of course another tried-and-true alternative :)
On Tue, 02 Nov 2004 13:31:13 GMT, snipped-for-privacy@consult.pretender (Jeffrey J. Kosowsky) scribbled this interesting note:
Then I suppose it is ok with you when we get lower prices on shingles when we buy by the truck-load as compared to buying by the shingle like you can at Home Depot?
Wal-Mart doesn't carry anything that will help most contractors in their day-to-day business. Even Home Depot is only marginal when it comes to carrying good, quality product and tools. These are "consumer" oriented stores, not stores that really cater to contractors.
We don't mark up the cost of our materials. Not all contractors do. But I understand the reasoning. Look, you will end up paying the contractor you hire the same amount, regardless. Contractors have what are known as fixed expenses. You know, things like licenses, liability insurance, worker's compensation insurance, health insurance, insurance on trucks, equipment expenses, and other overhead expenses. These expenses must be met. Then there is labor that must be paid; yet another expense that must be met. After all these items have been satisfied then, and only then does the contractor pay himself. Would it help you to feel better if the bill you received showed the price paid by the contractor for materials as being the price paid by you and the rest of what you seem to think of as an inflated price charged to you as "profit?" (Although you don't know what the true profit is since you don't know what that particular contractor's operational overhead is.)
Who has a case of bitterness here? Take the time to learn how to service your own HAVC without killing yourself. Learn how to do concrete work, framing, drywall work, electrical, plumbing, finish carpentry, tree trimming, irrigation systems, appliance repair, masonry, etc. There are countless things you need to know and buy when working on people's houses. Learn all these things, get all the required paperwork, do enough business (although you probably won't come close to any kind of volume to warrant economies of scale discounts) and you too can get discounts at real supply houses.
BTW, the "discounts" places like Home Depot give to contractors? That is still higher than what real contractors pay at real supply houses. And the materials and equipment you buy at place like Home Depot is usually of inferior quality since they like to squeeze their suppliers for every penny they can and charge the customer just as much as they can get away with.
-- John Willis (Remove the Primes before e-mailing me)
I have no problems with discounts -- the "market" will typically decide the most efficient and profitable way for suppliers to price. The only thing I was opposing was the entitlement atitude that somehow a license entitles a contractor to a god-given right to special pricing unavailable to homeowners. Volume is obviously one reason for better pricing, but the usediscounts depends on the volume, on the margins, on the volume efficiencies, and on the relative power of buyer vs. seller.
WalMart and HomeDepot are only examples of how purchasing and pricing power is shifting. Obviously, I wasn't saying one should buy specialty electrical supplies from Walmart
I fully understand that the business only works if the homeowner covers the cost of licenses, liability, workers comp, health, etc. I just think it is more straightforward if that is built into the cost of labor rather than as a hidden materials markup. After all, we all know that if I am paying $40/hour for an assistant, that assistant is not taking home $40/hour. However, I would prefer the price of materials to be equal to the actual cost plus a small markup for reasonable pickup & delivery charges.
What I am saying is that licenses have nothing to do with pricing in a free market. Volume is another story, but in the current more efficient supplier marketplace, pricing is much less sensitive to volume than people think (as evidenced by Internet pricing and big box stores).
I am not bitter because I trust the market and know that I have many ways of learning the actual pricing and getting a reasonable mark-up over cost.
I agree, but Home Depot has still forced many smaller hardware stores and supply stores to lower the price that they charge consumers since otherwise they will lose all the consumer business and even some of the small-time contractor business (despite the quality issues at Home Depot).
And if a contractor had to always walk around for 40 minutes with no customer service, wait in line while other stupid peoples questions get asked, wait for their checks to get cleared with the bank ( like at home depot ) and all that other bullshit, the contractor would be looking for someplace else pronto.
A contractor calls in advance, he knows exactly what he wants, the wholesaler either has it in stock or brings it in, and he puts it out on the dock--the contractor comes along, picks it up, signs papers and in ten minutes flat he is outa there, very little time being wasted on the whole deal by either party.
Something nobody had mentioned is the fact that wholesalers do not want to deal with ignorant homeowners/DIYers buying small quantities and all the nagging problems that come with them. Having a contractor's license and being in business implies some level of knowledge and/or experience in the use/application/installation of said materials. The wholesalers are not set up to offer help/instructions to the uninformed, inexperienced user; the big box stores are...
The next time you need a contractor to do some work for you, buy your parts/materials via the internet then ask him/her to install it/them. See what kind of warranty you get on the materials. It would be my guess a smart, savvy contractor would charge you more on the front end to cover what he/she may be losing from his/her normal price structure and for the possibility of having to deal with materials he/she may not feel is best for the application at hand.
I agree that a business has to cover overheads, but many want to cover the overheads twice over: once by marking up the materials, and again by marking up the labor charge.
When we lived in Taiwan, I never paid labor charges to get my car fixed: the markup on the parts covered the workers' wages. In NY I paid retail price for the parts PLUS $90/hr. labor charge.
MB
Whether you vote Democrat or Republican today, the country will still be run from boardrooms in the USA and elsewhere, not by your elected representatives.
On 11/02/04 10:04 am Jeffrey J. Kosowsky put fingers to keyboard and launched the following message into cyberspace:
It's all the same in the end: zero markup on labor plus ten dollars markup on parts, ten dollars markup on labor plus zero on parts, or five on each, all add up to the same thing. The contractor has to make his profit somehow. Why quarrel over what he chooses to call it?
Well, duh! Mechanics in NY get paid a bit more than mechanics in Taiwan. If the service stations in NY adopted the same pricing structure as you describe in Taiwan, they'd have to charge a *much* higher markup on the parts in order to make their profit -- and then you'd be screaming about the outrageously high markup on parts.
Contractors discount is mostly myth these days at the modest end of the business. I haven't seen much better than 10% in a long time, and plumbing and electrical forget it. Costco and the Borgs are generally as cheap. Volume in lumber sales will get you a cheaper price but if you shop around, drive a hard bargain you can even get those deals. But if all you are building is a sundeck most places are going to charge you more.
But if you are in the high end market ($400 toilets, etc) designers and builders can get deep discounts.
from a distributor point of view he's right but exaggerated figures pulled out of a vivid imagination - but got the point across correctly.
Hey, if some stranger walks in to the wholesale house and knows exactly what he wants and doesn't ask some dumb how to question the counter guys are probably going to give it to him then ask whom for... just for my home' cash will have him assumed working in the trade and maybe asked whom he works for to not insult him with last column pricing on some items that book price way up there. Computer holds the key to special customer pricing otherwise its most likely standard pricing service last column, which by the way mostly is 50% off retail which is fine on small odd items but popular everyday stuff way out of line. If he takes that material home and calls a contractor to install it and that contractor sees whom supplied the material - hell will be raised and a wholesaler may very well lose a good customer whom will tell other contractors - if it happens as normal everyday thing,, that wholesaler soon will not need to worry about extending credit to the trade, which will take a major everyday worry off their minds and can reduce inventory levels to make the CPA happier with ratio's & watch the gross margins rise as the net margins fall. I could go on but I'm really not related to Turtle.
Ignore the beat-down by self righteous contractors-- here is how I got the deal--FWIW.
I was replacing my roof, and called the local roofing supply company to get a price--- I described what I wanted using general terms, they gave me a price. I wrote down the price and model number and other descriptions. Later, I decided to get the supplies from another location, same company. I called them to confirm I would get the same price, but instead of sounding like a dolt-do-it-yourselfer, describing in general terms what I wanted, I just said (somethign like) "I need 14 square of GAF shingles... " and went on to refer to it using item number, etc. I found the price quoted was about 20% less. I thought about it for a while, and figured out that they had given me what I presume was a contractors discount, just because I sounded like one. The next time I needed some stuff I tried the same thing, getting the insiders model numbers from one location, then going into another location, in my work clothes, and asking for stuff by model number, etc.. and I got a better price. Go figure, not sure if it works anywhere else, but for this particular store it appeared to be an informal system, and if you looked and sounded like a contractor you got a better price... give it your best shot.
Save your flames, if they guy didn't ask if I was a contractor, and just assumed I was, that is on him, not me. I am not going to correct him and ask him to raise the prices. Also, if the business relies on this informal method of setting prices, TOUGH!
Earth to Jeffrey , If you think Home Depot is giving you a big discount on equipment such as HVAC stuff. I run a HVAC contracting business and sell at a
30% mark up on parts. Home Depot sells at a 50% mark up and if I sold at Home Depot's prices I would have to go up on prices by 20% higher. Whatever Home Depot sells for $1,000.00 -- I sell for $850.00 or so.
I see now that I step out here in a bunch that does not know what Wholesale prices really is. What the bunch here has been told by the internet hvac suppliers and Home Depot as a super discount wholesale pricing is a joke. What you can buy off the internet and pay shipping on the stuff with no warrenty , I sell for the same price or lower and warranty it with free labor for a year. What the bunch here calls a wholesale prices is what I call Retail prices.
If the public could buy at real wholesale prices. There would be no more hvac contractor and everybody who works on them would be just Do it yourselfers and if you had a real problem with the freon system to try to fix. You would just have to go buy a new one for all the real tech that could fix it would be in other businesses. Now look at Repair of refrigerators and freezers. The only ones left is Sears and sellers of the Refrigerators and freezers. If it gets outside the warrenty limits. It become too costly to repair because of the only ones that repair these freezers and refrigerators is the sellers of them and they have driven the price to the moon to repair them so you will want to buy a new one from them when the warrenty runs out. I'm the only one in town that knows how to really repair refrigerators and freezers but I only work for customers that I do their HVAC work for and just don't need the extra refrigerator business. The repair of refrigerators and freezers are far harder to do than HVAC work because of all the electronic controls on them now days. I think a refrigerator is hard to work on and a 20 ton rooftop Package unit is easy as hell to work on.
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