REAL ISSUES. REAL ANSWERS: Guaranteed Pricing and Quantities
While the new construction and remodeling markets are growing stronger in most areas of the country, the battle for business rages on for many dealers. In an industry known for razor-thin margins, this issue can have significant consequences for a company’s bottom line. Here’s the suggested question from a Minnesota dealer: “Our issue has to do with guaranteed material quotes. More and more contractors expect the lumber dealer to hold the pricing and quantities on their bids to build the project. This is an alarming trend that has no end in sight. How are other dealers managing this challenge?”
As we do each month, we sent a brief survey to the LBM Journal subscribers who’ve opted in to receive our email communications. Thank you to the 128 dealers who took time to share their insights. If you’d like to participate in future surveys, please drop me a note at Rick@LBMJournal.com.
When your company quotes a project for a builder, for how long are the prices and quantities guaranteed? First, we wanted to benchmark how long respondents typically guarantee product prices and quantities. As you’ll see in the chart at right, 30 days is the most common answer at just over 50%, with 10 days a distant third at just over 13%. Interestingly, nearly one-quarter of respondents checked “Other (please specify).” As you’ll see in the sample responses below, most of these answers are situational—with fewer hard and fast rules.