Garage door industry magazine for garage door dealers, garage door manufacturers, garage door distributors, garage door installers, loading docks, garage door operators and openers, gates, and tools for the door industry.
Issue link: https://idoi.epubxp.com/i/216705
SALES&MARKETING; (continued from page 36) project would add to your purchases from the manufacturer. Remember the defnition of a good deal is where everyone makes out.....the builder gets more competitive prices, you guard your margins and the supplier gets more volume from your area of the country. Everybody wins! Negotiate – Once you have a good grasp on market cost and if you discover you are paying higher prices for doors and openers that meet the same specifcations, I would urge you to sit down with your current supplier rather than just jumping ship. In most cases, the goal will be to continue buying from your same supplier if possible and in the process strengthen the supplier-purchaser relationship through open and honest negotiation. Having documentation to support the data gathered is extremely important. Consolidate – Inevitably the volume being purchased will have some infuence on your cost. Are you fragmenting your purchases between a variety of suppliers? If so, you may not be getting the deal you think you are. There may be some instant cost savings through consolidating these with a single supplier. This may also help with lowering your freight cost. While it would be nice to have the freedom to cherry pick the best from a large variety of suppliers, you will fnd that practice ineffcient and usually will not yield the lowest cost. Plus it is diffcult on your staff. Supporting multiple shipments, price structures, purchasing procedures and being sales experts on wide variety of manufacturers' products is a very tall order for most dealerships. Another way to buy at a lower price point would be to increase the amount of purchased and decrease the frequency of shipments. Whenever possible, ask for special price concessions if your next delivery flls the truck (or even the majority of it). The manufacturer realizes a cost savings by not having to make multiple drops and there is no reason you should not share in this cost reduction. If not in a single shipment, perhaps you can lock in on a reduced cost for a series of deliveries over a fnite period of months. Prompt Payment Pays – A quick way to save instant cash is to take advantage of prompt payment discounts. In our example above, if the suppliers offered a 2% discount if paid in 10 days, there would be a $9,000 savings right off of the top. You can see that this would have a pretty dramatic impact on your bottom line. So if your suppliers offer discount payment terms, take them. If they do not offer discount terms, ask for them anyway. As they say, cash is king and speeding up the payment process is worth money to any business. For additional cost savings, consider paying with a credit card that gives you cash rebates. The hidden bonus in this scenario is by taking advantage of prompt payment discounts you are also building a terrifc credit rating. Now who can argue with that? Yes, massaging hard costs is a necessity in the monitoring and managing of your cost of sales. It is most likely an exercise of a combination of the points addressed above, getting better purchase prices, lowering freight, prompt pay discounts etc. This is most effective while holding or even slightly increasing your selling prices. The name of the game is maximizing gross margin and lowering your material cost is one big way to accomplish this. Labor & Equipment Hourly or Piecework? Ah yes, the old industry question, do you pay feld personnel on an hourly or a piecework basis? Which is more cost effective? What are the drawbacks to each? We could devote another entire magazine article on this subject but for this discussion we will focus on how each can infuence the direct labor component of your cost of sales. Continued on page 40 Price Per Project – Asking for special price concessions on a per project basis has been a long time practice in the garage door industry, mostly for commercial bid and larger residential tract building projects. But since entering the Great Recession beginning in 2008, smaller home building projects also qualify. Do not be bashful about going to your manufacturer with smaller projects, especially when those involve higher end products or securing new customers. When you do this make sure you have a written description of the project from the builder / developer that describes its overall scope and a time table projections for construction. You then need to extrapolate this data and present the potential additional sales this V O L U M E 4 6 I S S U E 6 2 0 1 3 39