By Bridget McCrea
How to work with contractors that are looking at their bottom lines and saying, “Hey, how can we get a better price on our lighting products?”
In the April issue of tED magazine, two different electrical contractors told their stories of how distributors are helping them win new lighting business. In the Contractor Q&A, a Pennsylvania contractor described a time when a distributor went the extra mile to provide LEDs for a large school project. “My distributor contacted the manufacturer of the lamps and got me a better price than could have been expected,” the contractor explained. “The distributor supported me all the way and the school appreciated the effort.”
After reading the contractor’s story, Rock Kuchenmeister, general manager at K/E Electric Supply Co., in Mt. Clemens, Mich., says the distributor was right in trying to find a quality product that met the customer’s need while still maintaining profitability (for the distributor) and providing an adequate return on investment (ROI) for the end user (the school).
“That’s the tightrope that distributors walk all the time,” says Kuchenmeister, “and not just with lighting products, but with all products.” He adds that most electrical distributors and their salespeople manage this type of bargaining at varying levels throughout the project bidding process. “This is pretty common practice.”
The question is, what role do the product manufacturers play in this game of give-and-take, and how cooperative are they when it comes time to “massage” the numbers a bit in order for all entities to get what they want? According to Kuchenmeister, the answer to those questions usually depends on the level of relationship and depth of loyalty that exists between the distributor and its suppliers.
“Obviously if you go to a particular lighting rep, who you work with often— and if you’re bringing work to the table, like the distributor did in the contractor’s school example—then the rep will probably be excited about the opportunity,” states Kuchenmeister. “Clearly this distributor salesperson has solid relationships with at least one of the local reps in his or her area.”
Going the Extra Mile
For Bulbs.com, CEO Mike Connors says contractors that want special pricing are as common as distributors who “introduce” end user customers to the contractors that they have strong relationships with. “There’s definitely a lot of partnering going on, and some of that includes price negotiations in order to get the job,” says Connors. If a contractor that has worked with Bulbs.com previously, for example, happens to be bidding on a large institutional job (i.e., a hospital retrofit or the building of a new school), he says the distributor does what it can to help improve its customer’s profitability while also maintaining its own financial viability on that specific project.
“This is really a conversation that we try and have with our customers early in the process, so that we can get a feel for the competitive landscape that the contractors are working in,” Connors explains. In some cases, the contractor has already won the project bid and is now trying to eke out a bit more profit. Just a few weeks ago, for example, the distributor was working with a contractor that was involved with a lighting project on a high-rise building in California.
“The contractor was working on seven of the floors (give or take), and came to realization that it had bid the project a little too tight,” says Connors. “They were going to be doing a lot of work and not making much money, so they came to us to find out what the options were.”
Connors says Bulbs.com went back to the manufacturer (which it had already quoted) to see if it could “work a better price.” Concurrently, the distributor started looking around for other, more affordable product options. “We sought out a different lighting package that cost less but that offered equal performance,” says Connors, “while also examining the lighting control package to determine whether there was a way to accommodate everything that customer was looking for in terms of performance, but at a different price point than what was originally quoted.”
In the end, Bulbs.com got the order, the contractor improved its profitability on the project, and the end user was happy with the specified products (the new products are being installed on the second floor of the multi-story building and Bulbs.com is the designated distributor for the remainder of the project, according to Connors).
“Everyone Always Wants a Better Price”
Ask Jim Dunn, executive VP at Warshauer Electric Supply in Tinton Falls, N.J., what he thinks about distributors scrambling to meet their customers’ pricing demands and he’ll tell you that he’s been hearing that same story for decades. “Everyone always wants a better price,” says Dunn, who prefers to focus on the deeper meaning behind such requests before breaking out his calculator and picking up the phone to haggle with his own suppliers.
“If we constantly went back to our manufacturers and told them that a contractor wanted a better price, we’re basically telling our supplier that we add no value to the sales process,” says Dunn, who looks first at whether the contractor is actually using the right product for its specific application. That usually requires a site visit, says Dunn, and the involvement of a Warshauer employee who specializes in commercial lighting and LED. “Whatever the application is, that person would then make sure the contractor had the right product to meet that application,” says Dunn, “and that the end user selected the right product to meet its needs.”
Next, Warshauer will typically conduct an energy and/or ROI analysis to, say, determine payback on LED. “Once all that’s completed, and after we paired the application up with the right manufacturer, we give the contractor a competitive price,” says Dunn. “This is just one example of how truly partnering with your manufacturers and customers shows how your distributorship can offer services that go above and beyond, all while remaining competitive in price.”
McCrea is a Florida-based writer who covers business, industrial, and educational topics for a variety of magazines and journals. You can reach her at email@example.com or visit her website at www.expertghostwriter.net.Tagged with contractors, lighting, pricing, tED