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  #11  
Old 01-03-2014, 07:09 PM
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"So the problem is that because Volt doesn't have any kind of contractor discount, they take all that mark-up away from the contractor. Now, instead of making 60-100% mark-up, you're making 0%."

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.



I don't care what product you're selling in what industry, 0% is a crappy deal for you. Sure, your bids are a lot more competitive now. Maybe that equates to you landing a few more lighting jobs. But at what cost? At HUGE cost to you. While the rest of us are making good money at lighting, you're making a whole lot less."

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?
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Old 01-04-2014, 02:28 AM
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Originally Posted by starry night View Post
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.


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Originally Posted by starry night View Post
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.
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  #13  
Old 01-04-2014, 09:42 AM
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I have never had an issue of folks shopping my fixtures, and here is why. This is just a suggestion and please don't be offended but, perhaps you should sell yourself as a lighting designer instead of a brand fixture salesman. Kichler has enough folks on the payroll doing just that already. Instead of listing every brand, model number, piece and part on your quote sheet, be simpler and more generic- I know my clients couldn't care less as long as they know they are getting a solid product- they are buying "ME". When you list brand and model numbers on your quote sheet you are opening yourself up to be shopped. When I sell, my clients rarely, (if ever ask me about brand), I just hand them a sample of what I will be using and am very general on my quote sheet. i.e...(8 spots, 7 mini wash, 4 path lights etc). This is a doctor patient relationship with your client- stop acting like a fixture peddler and they will stop treating you like one. There are doctors and there are pharmaceutical reps- which one are you going to be?

Regardless of what brand you sell or how you acquire your product- there is always markup put on it; (even if my clients know what I bought it for). You see, most of our clients are professionals and business owners themselves. They understand about making profit and purchasing. That is simply just business. The whole notion of having my hands tied and that I can't mark-up product because I buy product from outside the antiquated, supply house distribution chain network, is just a silly statement. My clients don't care about becoming my competition in the fixture buying realm. They just want a great job at a fair price. Just because they can buy equipment at the same price doesn't make them a lighting pro. When they open the fixture box- 10-15 years of design experience and know how does not come with the fixtures- and most know that. Trust me, they have all seen friends of theirs try to save a buck and they know how poorly it turned out.

Is it necessary for contractors (who continue to purchase overpriced equipment), to continually bash and belittle those who may buy on-line and save money for their business? Just because their business model is different than yours, doesn't make it wrong or dishonest in any way as many here would infer. Now granted, some of the online retailers sell junk- but some of it is very very good and superior to what I buy at my local distributor at half the cost. Why should I feel obligated to line someone else's pockets with profit I could keep for my family and the health of my business? Is there some displaced sense of loyalty that some must support the local distribution network? Why? Are the online retailers any less loyal to me because I choose to have a part shipped to my doorstep instead of wasting 2 hours driving across town to pick up a $30 part for a little face time? Local distributors have done nothing to improve or aid my business. They are just a middle man stock house that is generally "understocked" and "over-priced". The days of the local distribution house are numbered- contractors are already waking up to the fact that they can leverage their purchasing power better on-line to make more profit and be more competitive in a stale economy. I believe you will see some groundbreaking things in the next several years that will change everything about where and how, as well as the convenience and speed and price at which contractors can procure their equipment.

Ok, done with my soapbox.
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  #14  
Old 01-04-2014, 09:55 AM
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Wb,

I've used Volt before in the past. I like their prices on transformers. I do not think the transformers are UL listed though.
All of their transformers are listed with ETL.
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Old 01-04-2014, 10:00 AM
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INTEGRA Bespoke Lighting INTEGRA Bespoke Lighting is offline
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Three cheers for Tim! One for each paragraph above!

To those of you so busy selling other companies' products/brands, I ask you; what are you being paid to do so? Why not take all of that focus, energy and money and use it to sell yourselves instead? Finally, to the loyal Brand A fixture schleppers out there: what brand of fillings do you have in your teeth? What brand of file folders and boxes does your accountant use? How about they company that built your home... What brand of lumber, nails, etc did they use?
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Old 01-04-2014, 10:14 AM
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Originally Posted by JimLewis View Post

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.
Uh Jim, why is it you only perceive that you have profit with Kichler? Just curious- with as long you've been in business, shouldn't you know how to make a profit on anything you install by now? Pavers, walls, water features etc...

I mean no disrespect, but the your whole VOLT reasoning and argument is lame. You make it sound impossible for contractors to sell a product that has no hidden pricing. I'm going to have to call baloney on this one. I have been selling it for 4 years. Never once had an objection to it by a customer like you have and I keep my prices up there where you are selling a C quality product by an A quality marketing company. The reason you have objections to it, is how you present it and sell it. At the end of the day, I haven't undercut anyone because I am usually the highest priced quote. I keep the value and integrity of the industry high because of the quality of the installation, and I have more cash in my pocket at the end of the job because I didn't pay middle man fees to some irrigation house. So, how does this make me a piker? Just sounds like good business to me.
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Old 01-04-2014, 11:44 AM
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... So, how does this make me a piker? Just sounds like good business to me.
Never said you were a Piker Tim, you're putting words in my mouth now.

What I said was there's a lot of contractors who don't know how to run a good, profitable business these days, in a lot of different parts of our industry. A lot of that is because they don't mark anything up (to keep their quote low and hopefully land the job) and so they think they're making good money on the job they do (because they figure they're making money on the labor end), only to find out they're out of money a few years later and can't figure out why. They're now out of business and off to some other life. But in the process, they undercut the pricing so much in the industry that it made a lot of the rest of us who price things correctly seem like we charge unreasonable prices. Guys who do sprinkler systems at half of what we would do them for because they're using the cheapest brand they can find, using fewer zones, zoning improperly, not installing proper coverage, etc. - those guys as pikers. And guys like that have nearly dominated the irrigation, lawn care, drainage, and general landscaping parts of our industry to the point where THEY are the normal quote the customer gets and companies like mine are the exception.

Many residential homeowners have this notion that they need to get 3-4 bids when they hire a contractor. Which isn't a necessarily bad idea, I guess, if you don't have a referral or something. But what goes along with that is another notion that the main reason you need to get 3-4 bids is to find out who the "rip-off" contractor is and who the more reasonable ones are. So you get 4 bids for a sprinkler system and 3 of the contractors give you a price of $3,000-$3,800. Then another company comes along, they have a much better presentation, much better proposal, information, reputation, all that. But their price is $5,800. Almost double what your other bids are for. At that point, you're thinking, "Well, they sound great. I wish they were more affordable though. After all, its' just water, right? It's a tough call. What they said makes sense. But maybe it was just a sales pitch. This is why you get lots of bids right? They sound good, but it looks like their just really overpriced. I guess I'm going to go with my 2nd most favorite bid and save a few grand. I just can't see spending that much more. It's too high."

So those other 3 contractors they got bids from could be all pikers. I see it all the freakin' time. We have 3 FT irrigation technicians who charge $75.00 an hour simply because there are so many crappy irrigation systems out there that weren't designed right, totally installed wrong, or broke quickly and now need repairs. So many cheapskake contractors out there winging it and installing crap systems. So we have a tough choice as a company. Either keep our pricing where it should be and just know that we won't land many jobs - or go with the flow and cut our prices down to their levels and figure out a way skimp on the installation. I just refuse to do the latter. But it means that we don't land nearly as many irrigation installs as we used to, just 5 years ago.

These guys in the irrigation industry don't mark up materials at all. And even their labor rate is way too low to be sustainable. It's short-term thinking. They're thinking that $40 an hour is plenty to pay for their workers and have a little left over for them. But when you consider the overhead of running a company all year, keeping employees all year, all the other expenses in running a professional company - that's not even close to enough money. We all know that certain things keep eating even when they are sleeping. So if you don't land jobs for a few weeks or winter business is slow, how you gonna keep paying for your shop, your truck payments, workers, cell phone bills, and all the other things that keep charging you money all the time, even if you aren't working? Part of the way a smart contractor pays for all that stuff is by recovering overhead from mark up of product. These pikers don't do that. They are just using short term thinking and there's so many of them they make the consumers in the market place think that WE are gouging them. We're not. We're just the ones pricing things accordingly so we can have a sustainable company.

Fortunately, though, there are a few aspects of our industry that haven't been totally ruined by pikers. Probably because they require more skill and more perceived value from consumers. The hardscape (pavers, patios, outdoor living spaces, etc.) and the lighting are the two best examples. A fair amount of people - in the market I work in - will still pay top dollar for a nice outdoor living area in their back yard. They don't want some cheap hack doing it who doesn't have very many good samples of their work or a crappy warranty. If they're going to drop $30k on a new living area in the back yard, they want it to be really nice in quality and creative too. Not many landscapers have been able to figure out how to do all that, and do it well. And consumers are good at figuring that out. So if you're one who does know how to design very creative outdoor living areas, you have a great reputation, and you have lots of examples of your work, it's still fairly easy to land those jobs. The bad part is that even though maybe only 10% of our competitors are really good at hardscape, that 10% still equates to a lot of companies to compete against. They're good at doing them and they've figured out ways to do them cheaper sometimes (and offer less of a warranty because of it.) So it's getting harder and harder every year for us to remain competitive in that realm. We still do well because we market like crazy and get a crap load of leads. But every year we have to work harder and harder to land those jobs.

The lighting industry is another example of one that hasn't yet been ruined by cheapskate installers. Sure, there are plenty of them out there who install lighting systems without any artistic vision or who just throw a bunch of pathway lights out and a couple spot lights and call it good. They pull jobs away from us sometimes. But most of the higher end clients - people who really buy lighting - have learned that they don't want that kind of lighting system. They want a really nice quality and artistic lighting system. They want to see great photos and examples of your work. They want to get an idea that you can make their home/yard look like that one around the corner with the amazing stand-out lighting job that looks so much better than the others. And they heard you DID that job. So they care a little less about cost and more about that look their after. And there's little competition for it. Most LCOs and even a lot of landscapers are afraid to get too much into lighting. It seems to complicated. Then those that do, just often don't do it well so they find it hard to sell jobs. There's just not a lot of real good quality competition in lighting. So we we still price things how jobs should be priced. Good money on the labor end and good money on the materials end. The consumer is still getting lights at the price they'd be able to buy them for and we're making great profit. It's one of the only parts of our industry that hasn't been taking over by cheapskate contractors.

That's what I was saying. And no matter where you buy your product from, it doesn't sound to me like you're one of those guys. So not sure where you got that impression that I was calling you that.
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Old 01-04-2014, 12:06 PM
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I have never had an issue of folks shopping my fixtures, and here is why. This is just a suggestion and please don't be offended but, perhaps you should sell yourself as a lighting designer instead of a brand fixture salesman. Kichler has enough folks on the payroll doing just that already. Instead of listing every brand, model number, piece and part on your quote sheet, be simpler and more generic- I know my clients couldn't care less as long as they know they are getting a solid product- they are buying "ME". When you list brand and model numbers on your quote sheet you are opening yourself up to be shopped. When I sell, my clients rarely, (if ever ask me about brand), I just hand them a sample of what I will be using and am very general on my quote sheet. i.e...(8 spots, 7 mini wash, 4 path lights etc). This is a doctor patient relationship with your client- stop acting like a fixture peddler and they will stop treating you like one. There are doctors and there are pharmaceutical reps- which one are you going to be?
I hear you, here. I've often thought of this too. But there are some things in play here that are a little different.

For one, I think our clients, in the area we work in are really tech and consumer savvy. I have given bids similar to what you describe, where I didn't line-item each fixture and STILL had fairly wealthy people divide out the cost of the fixtures and come back to me with, "So I calculated this out and you're charging me $XXX.xx per fixture??? I went online and found XBrand fixtures for about $40 less than that. I feel like I'm kind of getting ripped off here." I have to be careful how I price things. We've just lost too many jobs from people who have done this.

Second, we're not a company who is trying to appeal to the top 4% of homeowners, who have $2mil homes. Sure, I like doing those jobs. But our company has always been a company who works for the top 25% or maybe even top 40%, depending on which service you're talking to. I cannot go to a good long term lawn care customer who has a nice, but modest, $380,000 home and say, "Hey. Don't worry about my high prices. I'm a 'Lighting Designer' and I'm worth it. Let me tell you why." In the end, they're still going to want to price me out and make sure they're getting a good deal.

We sell a lot to all sorts of income brackets. I don't have the luxury, as many in this forum do, of just appealing to the super high end customers. My customers vary from really high end down to fairly normal people. They are conscious of how every dime is spent. The whole reason I do break down my bids these days into an itemized fashion is not because I want to - but because the consumers we're working for often demand that kind of bid. So we just got used to doing it that way. To the consumer, it feels like you're being more fair to them if they can see what they're paying for every item. And as long as they can justify each item in their own head, they'll go ahead with the deal.

So I could just start going for only the high end customers who would probably buy my logic that we're a 'lighting designer' and be willing to pay more, but our volume would go way down. And I'd be alienating a lot of my other customers in the lawn care, landscaping, hardscaping, drainage, irrigation segments of my already existing business. I'm trying to cross-sell lighting to them as well as land the high end jobs. And we're doing all that very successfully. But I wouldn't be getting a lot of the work we do if I just marked up our product as much as I'd like to and just gave people a line about me being a 'lighting designer'. A lot of people would still just feel they're paying too much, once they checked on some pricing. But if I stay at the MAP pricing, I can still make a REALLY nice markup and still make a good profit and still land the volume of jobs that we land.

Anyway, I get what you're saying. I think that would work well if I had a lighting-only business. And we do use that approach to a degree, for sure. We're still more expensive in the lighting portion than most of our competitors. So I have to sell that to land jobs. But I also have the pressure of every 4th customer I give a bid to goes to the internet and sees what they're selling for on the internet. And if my price is a lot more, that customer feels like I'm gauging them. And I never know which client that will be. 3 out of 4 won't do that. But one of them will. And I don't want to lose that bid. I'd rather sell a product where I can mark it up a good portion and they can go to the internet all they want and not find it for less. Then they feel like our prices are competitive and we get the job! Works well for us.
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Old 01-05-2014, 07:50 PM
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Tim and James, Thanks for elaborating on my two points. Sometimes I am a man of too few words.

Jim, You are very highly successful in your business. Why are you so worried about the schmuck who might underbid you? You've got a reputation.
Sell yourself and your company not prices.
By the way, you were involved in a similar discussion in March of 2011 and you had several posters saying the same things that have been said here.
http://www.lawnsite.com/showthread.php?t=342860
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Old 01-06-2014, 12:17 AM
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The Lighting Geek The Lighting Geek is online now
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If I were in the irrigation business, I would operate it the same way I do my lighting business. Landscaping, concrete, walls, decks, you name it. I am a long time veteran of the landscape industry, started VERY young, on my own for neighbors, friends. Went to work for others and then on my own again. I'm sure many have a similar story as well, but here is my point:

When someones tells me they can buy 'whatever' on the internet, they are not my customer and never were. Every top contractor I have had the pleasure of working with through TV, are the same. They have a similar attitude, presence, manner, and professionalism. And this is in one of the toughest economies in the country, Sacramento, California. Sure we get asked occasionally about pricing, but I educate my client a little, if they don't get it, I move on the next one.

I believe companies who keep getting cheap or penny conscious clients, are basically screaming to these customers to call, because of how they market or present themselves. I don't just mean a logo and uniforms, and such. Marketing is the most important thing outside of a good skill set and sound professionalism. I could do a whole seminar this, actually I have.

Word of mouth is not a marketing plan, it's the by-product of a good marketing plan. Some people are fortunate to be parts of the country where word of mouth keeps them busy, but not here. Everyone knows who we are in my area because I told them who we are and backed it up with great customer service and follow up. We are not the cheapest either, usually the highest bidder.

Volt is a good company and they back their products. So do many other companies. We use mostly Kichler, but we also use FX, Unique, BK, Excelsior, Vision3 and others. I have used Volt quite a bit as well.

I get the point that businesses have a volume of business to maintain, I truly get that. But take a minute, think about how you are perceived in the marketplace, start there. Contact me if you want and I will help anyone I can. This not meant to insult anyone here, I just think we're asking the wrong question.
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