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mulch suppliers - biz question

Discussion in 'General Industry Discussions' started by BradLewisLawnCare, Oct 4, 2011.

  1. BradLewisLawnCare

    BradLewisLawnCare LawnSite Senior Member
    Messages: 279

    Straight forward - do mulch suppliers make money discounting mulch to landscapers or is a loss leader. What are there costs?

    i know retail around here is about $30-35/yd and landscapers pay about $25-28. What are your thoughts?
  2. FoghornLeghorn

    FoghornLeghorn LawnSite Senior Member
    from Texas
    Messages: 753

    No, I wouldn't think they're loss leaders. Many landscapers only go to the mulch yard to buy mulch and nothing else. The loss leader concept dictates that other products must also be bought to achieve an overall profit.

    The reason for the discounted price is that there are no middlemen to take a cut. You're buying directly from the facility that grinds the mulch...
  3. BradLewisLawnCare

    BradLewisLawnCare LawnSite Senior Member
    Messages: 279

    In my area it is the same price to buy at the manufacturer or the farm that stores it. One company makes all of the mulch in Albany.... pretty much. And they will sell wholesale at suppliers price. The same guy loading a retail customer loads me with the same bucket and the same amount of time, but he puts a little bit more in there for me since i frequent all the time.

    I know the concept of loss leader. I was wondering if people had any numbers. I pay 26 and change after sales tax. If i bought from the same place i pay $32.40. That being said do they just hope i buy enough mulch? or do they hope the their inventory turnover will help offset their fixed costs?
  4. WenzelOSLLC

    WenzelOSLLC LawnSite Senior Member
    Messages: 709

    I imagine that if the place grinds its own mulch it would have charged a "disposal fee" to whomever brought the trees in and then turn around and sell at a small profit and hope to sell large quantities.

    As far as someone who buys wholesale and then sells retail or supplier rate, might have something like a 10% markup and a 5% markup for each rate. Again looking for quantity sales.
  5. BradLewisLawnCare

    BradLewisLawnCare LawnSite Senior Member
    Messages: 279

    i have imagined this too, but i was hoping that someone would have industry information less speculative
  6. FoghornLeghorn

    FoghornLeghorn LawnSite Senior Member
    from Texas
    Messages: 753

    Look, it is not a loss leader. The mulch facility does not have 51,000 different products like a grocery store does to offset the loss on mulch.

    Many landscapers just go to the mulch facility to get cheap mulch, and that's it, period. They buy nothing extra besides mulch. In order for the loss leader concept to work, landscapers would have to buy a ton of other "extras", which they often don't...
  7. Steiner

    Steiner LawnSite Senior Member
    Messages: 409

    Place I frequent:

    Retail 32.00 yard
    Wholesale 21.00 yard

    They charge to have material dropped off to them for feed stock.

    All of their material is either dropped off (Cha Ching) or is brought in from their rather large commercial land clearing operation.

    Makes overhead low. I would estimate at the volume they do it with a very small staff and older machines they produce mulch at 15.00 a yard or less all day every day.

    They are making 6 or more a yard off me or 17 a yard off joe homeowner. From talking to the owner of the operation they would rather sell to contractors any day just to deal with less hassle.

  8. UpperCutLawns

    UpperCutLawns LawnSite Member
    Messages: 11

    A local nursery by me gets $35 yd retail, and $31 if your a landscaper. I can drive 15 min to a guy who makes it and pay $20 yd cash. I often think, if I had the room I would just keep some bulk mulch on hand.
  9. allinearth

    allinearth LawnSite Senior Member
    Messages: 614

    More quantity less hassle = less price

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