Passing material savings onto customer...

Discussion in 'Hardscaping' started by mcclureandson, Feb 9, 2008.

  1. mcclureandson

    mcclureandson LawnSite Member
    Posts: 242

    I'm curious what more experienced hardscape contractors would do in this situation...

    I had gross sales last year of about 725k - 25% commercial maintenance/55% landscape-irrigation install/10% water features/10% hardscapes.

    My block supplier has over 100 pallets of a discontinued color line - (not seconds or trash block for below grade/pedestals) - he'll sell them to me for 1/10th normal cost.

    I've got a 700 sq/ft wall project for my shop - that parts a no-brainer. 25 pallets there.

    I've also got a retuned bid on a 600 sq/ft wall/stair project (approx 150 linear feet 4' tall). It was submitted for a previous residential landscape/irrigation client. I came back with something over 20k with demo of an existing rr-tie wall and a little bit of re-sodding. That was over their budget considerably...

    I've recalculated the bid with the reduced material costs, simplified the design and eliminated a series of planters worked into the face of the wall...and now it's closer to a 15k project. Still over budget but a bid I'm certain they'll accept...

    Would any of you guys drop your price to reflect a reduction in material costs?

    And before I get flammed too badly...I'm very busy but look on this project as more experience for my field workers, an addition to my portfolio and a chance to grow that portion of my business.

    I don't intend to make this a regular practice and realize their will be no discount on my labor, overhead, base stone, fabric, drain stone, glue, caps and so on...

    Thanks
     
  2. BrandonV

    BrandonV LawnSite Platinum Member
    Posts: 4,260

    heck as long as your making your rate on labor I don't see why you shouldn't, that's the beauty of being a big timer, you get product cheaper and thusly can charge less and thus get more work, like a reverse catch 22
     
  3. LB1234

    LB1234 LawnSite Gold Member
    Posts: 3,210

    We did a walk two years ago for a couple. I took them to a supplier and we noticed they had 'left-over' pallets of pavers. Customer asked if it was possible to use them...why not...he saves a few bucks a square foot on the materials and still got the same look he was going for. My labor rate and everything else didn't change. Only issue is whether or not all the product you need is there...and in good shape.
     
  4. mcclureandson

    mcclureandson LawnSite Member
    Posts: 242

    I've yet to see a down-side. Also, I think I'll buy another 20 pallets (550-600 ft) of material for other projects down the road - and for fill materials for under grade/pedestal steps etc...at .50 per block it's a steal.
     
  5. shovelracer

    shovelracer LawnSite Silver Member
    Posts: 2,009

    Being the situation, I could see doing it. The only issue I see is maybe some kind of clause about the block, meaning if for some reason you do have to replace some of it that it must be of equal value and not full price. If the customer understands the circumstance and doesnt expect all future work to come at this price than why not. When I read the title I thought the question was going to be about your supplier giving contractors 20% off, when joe blow pays full price. In that case I keep the 20% to make up for time and gas to order, pickup, what have you, rest is profit for my troubles. This is different though.
     
  6. mikeny

    mikeny LawnSite Member
    Posts: 32

    GET IT DONE, I have done just that many times, so far always been a fill in job with just a few pallets of material, same goes for plants, if a grower wants to blow out some inventory we will look back to proposals that were over budget. Most of the time these deals go to established customers or a builder who pays on time
     
  7. PatiosInstalled

    PatiosInstalled LawnSite Member
    Posts: 114

    yeah i would pass the deal onto your customer, in the end you will still make the same profit.

    what kind of block takes 20 pallets to equal 600 sq. ft.
     
  8. mcclureandson

    mcclureandson LawnSite Member
    Posts: 242

    Belgard (and others) 6" modular blocks are a mix of small, medium and large block...the small/medium share a pallet that equals around 28 sq/ft.

    It's possible to build a wall using just small/mediums provided your base course(s) are comprised of large block.

    Glad to hear other guys would do the same thing. I am buying extra block for any future projects...for pedestals/base courses and anything else I can think of.

    I will make less on this job of course - I'll be marking up a much smaller amount of material cost.
     
  9. Paver Gangster

    Paver Gangster LawnSite Member
    Posts: 145

    Be up front with the customer, explain why the material savings, and pass them on to the customer for three reasons:

    1. The customer will (hopefully) not pressure you to "match up" the color somewhere else on their property

    2. As stated before, they will (hopefully) understand on future projects why you must charge more.

    3. Customers like being in on "inside deals". It makes them feel like players. The problem is when they start talking to friends . . . and then the neighbors expect the same deal.

    Not telling the customer and trying to pocket the savings yourself will lead to problems down the line unless you are a tinker and plan on skipping town soon. If you dont tell the customer the product is discontinued, and a neighbor likes it, and starts poking around, and calling the manufacturter, and then they tell the customer the product is a dud line before you do . .well, you see whwere this road is heading.:eek:
     
  10. mcclureandson

    mcclureandson LawnSite Member
    Posts: 242

    I told the customer the line was discontinued only because it was required to close the deal (and they're nice people).

    I'll use these discontinued lines at full price for any future projects for these (and other) reasons...

    1) Manufacturers are always discontinuing lines of color/patterns - I could have paid full price for these blocks a year ago and they'd still be in the same situation.
    2) Manufacturers usually have several similar/complimentary products still in production.
    3) The reduction in material costs is a direct result of my ability to "think outside the box" - I hustle around all the time trying to reduce MY costs - bargaining with different suppliers, keeping an eye out for ways I can add to my bottom line without sacrificing quality. I should profit from that - not them.
    4) My material costs are none of their business...I frequently get discounts on materials above and beyond what I'd consider everyday business. Price breaks on multiple truckloads of sod - doesn't change the final price. Price breaks on volume business with a single supplier - doesn't change the final price. Price breaks on either removing or bringing in fill if my subcontractor(s) have a need one way or the other etc...
    5) A discontinued product line is IMO not inferior to one still in production. I'd recommend keeping an extra or two on hand (why I don't know - but seems prudent) for any repairs.
     

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