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  #11  
Old 02-05-2007, 04:53 PM
sclawndr sclawndr is offline
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The point is that when you look around you have to understand what you're looking at. And everyone should remember that finding a bag of fert that is $1 cheaper sounds like a big deal, there are many ways to change your margin. For example, if your calibration is off by even a small amount, you're losing money. So if you only get 14,800 SF out of a bag instead of 16,000 SF, you're adding 10% to your fertilizer bill.

If you really want to change your margin, raise your prices. A 1% price increase ($35.00 to $35.35 per app for instance) will generate 5 times more money than a $1 a bag material decrease. Here's the math -

$50,000 annual revenue x 1% price increase = $50,500 (up $500)
1,600,000 SF = 100 bags of fert x $1 a bag decrease = $100
You would have to negotiate a 25% decrease in the price of the fert to get the same value as a 1% price increase. Now, which is easier?
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  #12  
Old 02-05-2007, 04:55 PM
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RigglePLC RigglePLC is online now
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fert value

Unfortunately, it is more complicated than that. I might figure that it depends on the amount of slow release. Slow release is more expensive. If the product at 15 dollars per bag was 30 percent slow nitrogen--and the product at 16 dollars per bag was 50 percent slow--then the product with more slow release would be a better deal. If you want slow release.
Myself, I am not clear how much more slow release costs than plain urea nitrogen.
Furthermore, you have to consider quality, flowability, convenience of dealer, and the phos and potash.
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  #13  
Old 02-05-2007, 05:31 PM
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Shades of Green LService Shades of Green LService is offline
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More slow the better.IMO
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  #14  
Old 02-05-2007, 05:40 PM
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Shades of Green LService Shades of Green LService is offline
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Quote:
Originally Posted by sclawndr View Post
The point is that when you look around you have to understand what you're looking at. And everyone should remember that finding a bag of fert that is $1 cheaper sounds like a big deal, there are many ways to change your margin. For example, if your calibration is off by even a small amount, you're losing money. So if you only get 14,800 SF out of a bag instead of 16,000 SF, you're adding 10% to your fertilizer bill.

If you really want to change your margin, raise your prices. A 1% price increase ($35.00 to $35.35 per app for instance) will generate 5 times more money than a $1 a bag material decrease. Here's the math -

$50,000 annual revenue x 1% price increase = $50,500 (up $500)
1,600,000 SF = 100 bags of fert x $1 a bag decrease = $100
You would have to negotiate a 25% decrease in the price of the fert to get the same value as a 1% price increase. Now, which is easier?
The price difference would have to be worth it. $1 would not. $10, yeah.and raise the price as well.the more you can save and make the better.Call me greedy, but i want to make as much as possible. example 100 bags of fert at say $20 a bag somewhere else $15 a bag(same sq. ft)
instead of paying $2000 up front your paying $1500. your saving $500 Bucks. and you can still raise your price 1% That's IF you can find it cheaper. I'm just saying If you can find cheaper....Why Not??

Last edited by Shades of Green LService; 02-05-2007 at 05:47 PM.
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  #15  
Old 02-05-2007, 06:36 PM
sclawndr sclawndr is offline
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I'm not saying you shouldn't try to get the best price you can on fert. If you can save a few bucks, great. But look at everything when you're trying to increase profitability. The beauty of price increases is that they last for the life of the customer. Fert discounts typically don't. If you're good, a price increase is easy to justify and if you're not, saving a few bucks on fert won't help all that much.

Two things about fert discounts - first, they usually come with bigger purchases. The bigger you get, the more you buy, the better the price. Second, it's going to become increasingly difficult to win big discounts from suppliers when supplies are predicted to be tight. The world urea market is getting a lot of pressure from oil prices and from an expanded urea market - namely China. The Chinese economy is growing at a good clip and its shear size means it will need a lot of raw materials. Big discounts just aren't out there.

Raising prices, even in small increments, and upselling additional services is the key to profitability, not beating a stake thru a suppliers heart. TGCL sells in my market entirely on low price, largely because their quality sucks. And yet I still see competitors trying to match their price. Why? If the quality sucks, what good is a low price? Don't compete on price, compete on quality and get a good price. Unless you're in my area of course and then please keep right on trying to match TGCL.
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  #16  
Old 02-05-2007, 06:46 PM
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Shades of Green LService Shades of Green LService is offline
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Quote:
Originally Posted by sclawndr View Post
I'm not saying you shouldn't try to get the best price you can on fert. If you can save a few bucks, great. But look at everything when you're trying to increase profitability. The beauty of price increases is that they last for the life of the customer. Fert discounts typically don't. If you're good, a price increase is easy to justify and if you're not, saving a few bucks on fert won't help all that much.

Two things about fert discounts - first, they usually come with bigger purchases. The bigger you get, the more you buy, the better the price. Second, it's going to become increasingly difficult to win big discounts from suppliers when supplies are predicted to be tight. The world urea market is getting a lot of pressure from oil prices and from an expanded urea market - namely China. The Chinese economy is growing at a good clip and its shear size means it will need a lot of raw materials. Big discounts just aren't out there.

Raising prices, even in small increments, and upselling additional services is the key to profitability, not beating a stake thru a suppliers heart. TGCL sells in my market entirely on low price, largely because their quality sucks. And yet I still see competitors trying to match their price. Why? If the quality sucks, what good is a low price? Don't compete on price, compete on quality and get a good price. Unless you're in my area of course and then please keep right on trying to match TGCL.
i agree 110%
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  #17  
Old 02-06-2007, 12:12 PM
upidstay's Avatar
upidstay upidstay is offline
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You also need to look at quality of the product. A friend of mine was bragging because he was getting 24-5-11 for $10 a bag, where we were paying Lesco alot more than that. But all he was getting was N, P and K. It was also mostly cheap quick release N. Dusty, chunky, junk. The stuff we were using was 5% iron, manganese, 50% slow release, plus a bunch of other trace nutrients.No clumps, consitent particle size, minimal dust.
I have seen and used cheaper products over the years and found out that you get what you pay for.
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  #18  
Old 02-06-2007, 04:46 PM
The Ranger The Ranger is offline
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Sounds a little high.
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