Customer Wants To Buy His Material

SKY330

After submitting our flooring proposal, customer responds back that he wants to buy his own hardwood flooring and the customer wants to deal directly with the same vendor and this vendor already has quoted the customer a price. Wow, what the _ _ _ _ is going on? I gave the customer a break on our labor due to profit on the wood. Customer wants to know if we could still do the job for same quoted labor price? I look at it this way, I've sold him a package deal not a just labor deal. How do you feel about this? Thanks.

Sky Flooring, Inc.

JumboJack

I hate this kind of stuff.I bet they want you to go pick it up for them too...

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in texas with framing and cornish people will do it for 3.00 a foot. What do yall think about that? Just laber

BobsLandscaping

Depends on how you mark up your materials. I mark up quite a bit because of how spread out things are around here. It covers my time and fuel to get the stuff. Now I have been placing the order and letting the customer pick up the stuff when they asked to. So far it's worked.

If your material mrk up is part of your profit and not just for you to get the stuff then I'd try to renegotiate.

Around here I can easily spend 3 hours getting stuff from the nursery in Moscow to a jobsite.

Winchester

Tell them that's fine, but you need to give them a new estimate, with your proper labour price, and there is no warranty on customer-supplied materials.

Tell them to let you know when everything you need is there (and acclimated), and there is a $xx per man-hour charge for you getting any or waiting for any materials that are missing or incorrect.

This is why I now give one price labour+materials.

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Ryan

Mitch M

What is up with this? Hijack the post and now trying to redirect to a different website? And a new poster to boot?

ARI001

I will let clients supply their own materials. I will not warranty the material. I do tell people that up front and let them know if there is a shortage or damaged materials it is going to be their problem not mine. I also charge if I have to pick it up. You shouldn't reduce your labor rates because you got a better deal on materials. I mark up the materials for the same profit margin regardless of the deal I get on them. I usually end up being able to give them the materials for less then they can get them that way and I still get a profit on everything.

Your vendor should not be quoting your clients the same deals they quote you unless you are using the big box stores. You are repeat business your clients are one time business. Shop around their are plenty of suppliers who realize this and will accommodate you. There are also suppliers that will increase your discount the longer you use them. Shop around and talk to some different vendors.

I am up front with people from the get go that, yes I do mark things up. That's business. I've never had anybody question this practice.

DavidC

1st order of business is you should consider checking out the introduction area and introduce yourself. It's nice to know we are not talking to a HO.

We have clients wanting to buy materials fairly often and I have no problem with that. All of our markup goes on labor except for a profit margin on materials we supply. Anytime they want to get their own we include a disclaimer that everything is to be supplied on site and in usable condition, shortages or defective goods are to be corrected by the HO without causing delays, any product warranty issues are between them and their supplier. Also include any materials or incidentals you will supply.

We only warranty that we will install it correctly according to manufacturer's instruction. We make it clear that if we need any additional material for any reason the client will pick it up or pay us to do so and cover the cost of any down time resulting. Normally any savings to the customer are dissipated by either their time spent or additional charges for our time.

The real key is to put everything clearly in writing.

Good Luck
Dave

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www.CookContractingLLC.com

Electric_Light

Huh??
It's a different game when there's bargaining involved, but when two different customers ask for quote for same quantity of the same product and in this case, to prevent your competition from being able to get the same deal, I believe it is unlawful under the price discrimination law.

http://definitions.uslegal.com/p/price-discrimination/

I'm still learning this. The one thing I do know is though, the better you know, the better you can negotiate in your favor...

The price discrimination type you see in retail setting, like youth/student discount, ladie's night, etc are a different game.

That is correct. Clear, precise, contract writing is the key.

480sparky

Warranty will also be an issue.

You need to make it very very very clear to the people that your warranty will only cover the installation, and not the product itself.

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Site : the area or exact plot of ground on which anything is, has been, or is to be located.
Sight : The power or faculty of seeing; perception of objects by use of the eyes; vision.
Cite : To mention in support, proof, or confirmation; refer to as an example.

Electric_Light

The product itself only covers defect in product and just in product in itself.
If the compressor fails in customer supplied condensing unit, because the acid build-up ate through the insulation due to excessive moisture in system caused by your apprentice's inadequate evacuation, then that is YOUR fault. The product did not break. The poor installation broke the product, thus should be covered under your warranty.

480sparky

The OP is installing a floor, not a CU. Last time I checked, floors don't need to be evacuated.

Let's say it's a laminate floor. After six months, it starts to delaminate due to a factory production error. I'll bet you dollars to doughnuts the HO will blame the installer and expect him to replace it for free. This is why you need to be very very very clear on warranty.

If the OP supplied the floor, then he will need to work with the manufacturer to get reimbursed for replacing the floor.

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Site : the area or exact plot of ground on which anything is, has been, or is to be located.
Sight : The power or faculty of seeing; perception of objects by use of the eyes; vision.
Cite : To mention in support, proof, or confirmation; refer to as an example.

ARI001

[quote=Electric_Light;728662]Huh??
It's a different game when there's bargaining involved, but when two different customers ask for quote for same quantity of the same product and in this case, to prevent your competition from being able to get the same deal, I believe it is unlawful under the price discrimination law.

I'm not preventing anyone from getting any kind of deal. Simply put it is common practice for suppliers to give better deals to those who buy larger quantities. If I'm buying 1000 sqft of flooring every week from the same supplier I'm buying more than the average homeowner buying a 1000 sqft once or the contractor who pops in once a year. Obviously I'm going to get treated better than the other contractor or HO. The guy who buys more than I do will get better treatment than I will. The legality of it probably has more to do with how you word it and the policies behind it.

I give military personal a discount on labor for service to this country, I don't offer the same discount to the average HO on the same job. Is that illegal to?

Additionally with a tax ID # as long as you buy the required minimums you can purchase direct from most manufacturers and/or distributors (we are licensed to and do collect sales and use tax as per State law when buying whole sale). Obviously your average HO is not going to be able to do this either. Is it illegal-no. Can they get the same deal we do and buy direct as a HO-no, they would need to take the same steps we have taken to do so. Anytime you buy in volume your cost per unit is going to be less than those who can not do so.

There may be a gray line when dealing with retail shops but they will do it if you buy often enough. You are repeat business, the average HO is not. Obviously you are normally going to get treated better. Most of the retail outlets call it contractor discounting, high volume discounts, or high volume customer discounts.

nitram

The guy sounds like a curmudgeon and he’ll end up being a pain in the arse throughout the entire process. Who ever it is has probably never worked in a trade and doesn’t understand how rude it is to undermine the contractor by going directly to the material supplier and asking for a quote. Tell him if he’s smart enough to source his own materials, then he can install his own materials himself.

And I agree with the previous poster. You need to work volume deals with your materials supplier. That way customers won’t be so motivated to find their own materials.

Darwin

Usually when a client wants to buy their own materials, it is because:
1. they want to know what you are actually making on the job in labor.
2. they don't trust you fully.
3. they are the hands on type. probably will ask to help on the install.

how did he get introduced to your vendor? You only have 3 options as I see it:

1. insist on the original package deal.
2. rework the numbers to make your profit. but then you are showing him proprietary info.
3. just walk away. Too much hassle...

Good luck.

Red Adobe

I'm with nitram

On metal roofs luckily theres not much chance of a HO getting the materials for even what I quote them ( i watch the carryout price at bLowesand stay at it), then they also need a long enuff trailer to hual it LoL

To me if a HO wants to get their own fuacets and light fixtures great but beyond that NO I got called into finish a house for an owner builder years ago and I spent alot of time waiting and explaining screw that

FarView

Word.

I'd run away from this job before it's too late.

JMO.

woodchuck2

I agree with ARI001 and 480sparky on this one. If the HO is supplying his own materials then you need to re-estimate you labor for installation and you need to address the warranty issue. If the HO doesnt like this then just move on, we are not in this business to work for peanuts. As far as the HO getting the same deals that we contractors get that is BS, as said above we buy in bulk/quantity so we should be getting some discount. My local hardware store gives me 15% at minumum and very often it is more but i also spend roughly $500-$2k a week in this place. I also help out the owner and staff if they dont know what a customer needs and help them order in new electric supplies that they dont stock yet. The owner of this store has at times given me items for helping and has even offered free equipment rentals. Now IMO i dont think just any HO should get this kind of service or discount.

jtpro

[quote=ARI001;728702]As a local example Granger's. I had to by a hammer drill local stores didn't carry or WAY overpriced. I paid close to $200. My best friend used to work for a compnay that had a LARGE monthly volume (tools fastners etc.) $125 SAME DRILL. As the above detailed post shows VOLUME= SAVINGS. Nothing wrong with it.

As far as the original post......WALK AWAY! ANY TIME you install a provided material NO MATTER HOW DETAILED the contract is, you will loose in the "word of mouth" court. HOs ALWAYS seem to leave out the details that show they're at fault!
and it seems product warranty issues ALWAYS lean towards "improper installation" issues.('cause after all NO ONE makes a piece of shizz product!) How many times can you afford to meet with the manufacturer's rep to plead your case?(ESPECIALLY if you didn't provide it!?)

Sometimes LEAVING money on the table SAVES you money in the long run! IMHO

DavidC

So far the OP is a one hit wonder so we are just stirring the pot here. But there is no reason for the contractor to take a hit because the client wants to buy materials. Chances are if this scenario sends you into an economic tailspin then you will at times take on a job that doesn't require a lot of material and you will wonder afterward why you didn't make the money your used to.

A customer may have any number of legitimate reasons to supply their own material. One of those reasons can easily be they don't want the contractor to make a profit on material. What ever the reason, it doesn't automatically mean that the customer is a loser to work for. There is no reason to tuck tail and run based solely on this point, but there is cause to be certain you are managing your business to make a profit.

None of us can accurately predict how much we will spend on materials in a given year. We do know how many man hours are available though. The OP is fretting because he "gave a break on labor due to the profit on the wood". Properly handled (check out Jerrald Hayes for great info) he would have already had his OH and a fair share of his profit figured into his labor rate. The only loss would be the profit he didn't get from selling the wood. Technically, there would be no loss because he didn't sell the product and doesn't have the responsibility for it. But at the end of the job he will have covered his overhead expense and made a profit on what he did provide. In this scenario it would make little difference to the contractor if he went a year without buying any materials or spent a million supplying them. It is much more predictable.

It is nothing more than a shift in risk/reward. Now the HO wants to reap the reward of supplying materials and deserves to shoulder the risk that goes with it. So the contractor needs to write it into his contract accordingly. You put it in writing, review it with the client, sign it and enforce it.

We do it on a regular basis without problems. Not to say that there won't be other red flags you should heed, but many times we gain a valuable client that calls us back and refers our company to others. Interestlingly most do not repeat the process after they do it once.

Good LUck
Dave

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www.CookContractingLLC.com

lawndart

Suppliers aren't supposed to be dealing with the public. It's a rule for any legitimate distributor of hardwood flooring. If a distributor started selling to the public, I and many other wood flooring professionals in my area would stop dealing with them.

Quick question for the OP. Do you write your proposals with Labor and Materials seperate? I've found by doing this in the past that some customers would price shop the material. Now I just lump it all together (labor and material).