Originally Posted by starry night
Jim, This is fuzzy reasoning: Volt doesn't take markup away from the contractor. They don't dictate your markup. You can still add any amount of markup you choose just as you do for Kichler or any other.
Any company who sales their stuff (or allows it to be sold) on the internet for any kind of discount is taking markup away from the contractor. If you haven't ever quoted a job and then had your customer go on the internet and find the fixture you quoted for a lot less, then good for you. But that's happened more times than I can count. I friggin' hate it when that happens. Now you're stuck trying to explain to the customer why they should buy fixture X from you for $170.00 when they can clearly buy it from lightingnet.com for $145.00. It's a crappy position to be in and hard corner to get out of. I can explain it perfectly fine - why they should pay more and buy it from me. I know all the arguments. But with a lot of people, those arguments just fly flat. They still feel like their getting ripped off. Whenever this happens, my chances of landing that job goes down by 60%. So sure, I could mark up that light to $170 if I want. And I can risk them finding it online cheaper and being in a pickle. OR, I can just decide, "to heck with it. I'll just sell these for $145 from now on. Not as much mark-up as I wanted to make. But it's still a good one. So from then on, I sell that light for $145. That company took markup away from me by allowing someone else to sell it cheaper.
With Volt, it's really egregious. Maybe I buy one of their nice bullet lights for $52. So then I mark it up to $90. Customer goes online and finds them for $52, now he's really pissed! Doesn't make me look good. My chances of landing the job go down. And I'm screwed.
Whereas with a company like Kichler, their new MAP pricing does not allow an online seller to sell for less than 12% off list. The most they can discount it is 12%, starting 2014. Now that I can work with! I'd rather they all sell it for only list price. But I can handle 12%. That leaves me plenty of room for markup. And plenty of mark-up either leads to a really
profitable job, or some nice wiggle room to negotiate with. As long as I don't subimit a bid for anything more than 12% off list, they can't find it anywhere cheaper and I look great. That's a much stronger position for me to be in.
Originally Posted by starry night
Again, this brings up the old debate about whether contractors are selling fixtures or selling our design and installation expertise. What if, in landscaping, your nursery supplier sells you a plant for $xxxx and the client can buy that same plant (and I do mean [U]same[U] plant) for a couple dollars more at the local big box store. What do you do about markup in that case?
I'm selling fixtures, I'm selling materials (wire, crimp/heat shrink connectors, hubs, transformers) I'm selling install labor, I'm selling my time to bid the job and oversee the job, I'm selling our procurement time, and I'm selling the ongoing service. And I want to make money on all of those items, to the degree that I can. Since I get a varying degree of discount on almost all those items, I can afford to mark them all up to varying degrees and still be selling them to the customer at about what he would pay for them. So it's a fair deal all around. Except I'm able to make a little more markup with the fixtures than I do with some other items in our industry. That's how it should be. That's how we all should do it. Unfortunately, too many cheapskate contractors who are just skating by just need money so badly that they forego a lot of mark-up, just trying to get the job. Maybe, just maybe, they'll land the job and AT LEAST make money on the labor portion. That's short term thinking and they'll be out of business eventually. But they ruin it for the rest of us, who are doing it properly. Fortunately, the lighting portion of our industry hasn't been totally inundated with hacks that are doing that yet, like most other parts of our industry already have.
To answer your question about the plants, we get a really nice mark-up on them as well, depending on which nursery we go to. It's anywhere from 25% to 100% mark-up. Also depends on how much driving around we want to do and how many different nurseries we want to go to, to get that big 100% profit. Sometimes you forego the huge profit just so you can get it at the one huge nursery who you know has every plant on your list. They're selling at only 20%. But that allows you a 25% markup and you're still selling it at what they would pay for it. Or you could go 10% more, be a little more spendy on the plants and still land the job, because although they could go to the nursery or big box store and save $3 per plant, they don't have a truck and trailer, they don't feel like getting dirty, and they don't want to waste half their weekend going to different box stores getting all those 120 plants on your design. So you can mark it up a little more and the customer is still happy. But with lights, you can type in a VISA card on some online site and 2 days that exact same light is on your doorstep. It's a little different scenario with lights vs. plants.
I never got in that old argument you mentioned. But if there was one, I'd be squarely on the side that we are not just selling our talent and labor. We're selling fixtures (at a marked up, but totally fair price) too. Why shouldn't we be cut into the profits a little. We're the salesman for that company, in reality. I'm Kichler's #1 saleman in the Portland market. Why shouldn't they cut me into that profit since I'm selling so many of them? I love that. It makes business a lot more fun when there's plenty of money on the table to make sure you don't have to rush, can do everything right, can stay as long as needed, can throw in a few extras as the job goes along without even thinking about it. I love doing a lighting job. You know why? Because all the normal stresses I usually have doing other kinds of work (landscape clean-up, paver patio, outdoor living area, waterfall, etc.) are gone. We're making a lot more bottom line profit on any given lighting job. So if I need to spend 2 hours doing some pruning to make these Japanese Maples just "pop" once we turn on the lights, I can do that. No charge to the customer. I can just throw that in. I underestimated on lighting wire and crimp connections a little and have to buy more? Couldn't care less. I'll go get them right now. I'm still making great money on this job. My whole attitude changes when I am doing lighting. Because everything's good. I know the customer's going to love it. I know they're going to want more. I know there's a 99% chance they won't call back with a problem. I know they'll be raving about our work when we're gone. And best of all, I know we'll be making really good profit on the job, due in large part to the nice mark-up I was able to make. I'm a happy man! All phases of the landscape/outdoor industry should be like this. But unfortunately, they're not. Too many pikers have ruined it.