Dealer Discounts?

[Kathy0701]

Hi,

Searched for a previous thread but didn't find one.  Hope I didn't miss it...I apologize if I did.

I got a call from a marina last week to come bid some work for a boat they were selling.  Worked up a price for them.

They got back to me today & asked if I'd applied a discount for dealers.  I've not done much with marinas yet, so I was taken a bit by surprise.  He told me that typically dealers get 15% off the price because of the volume they'd send my way.

I didn't know what to say, so told him I'd have to review my figures & see what I could do...but then thought I'd see what is common with you guys.

Thanks so much for your input!  I was thinking about knocking a percentage off materials, but I don't think my labor is going anywhere.  I'm busy enough without marinas right now, but don't know if I always will be, so I'm not sure if this percentage discount thing is really common practice or if I'm getting bamboozled!!!

Thank you again!

Kathy

[SHHR]

I've never heard of it, but also live in an area where there isn't a lot of competition in either dealers or upholsterers.

I wouldn't want it to affect your potential buisness with them, but possibly work out some sort of deal that you'll offer the discounts after they show you the volume they've talked about.

You can bet they're going to sell the boat at top price and use the new upholstery or canvas work as a selling point

Kyle.

[sofadoc]

In the sofa biz, I give decorators a discount on fabric, but not labor. If the decorator furnishes the fabric, then there is no discount. I'm with Kyle, show me the volume FIRST.
My guess is, that if the dealer was getting a discount, it was probably a "false markdown".

[seamsperfect]

You should have just said yes that price is with discount.   Since I wanted to start the relationship off right I took off 20% on this first transation, my standard is 15 :P
Kevin

[Mike8560]

yes Kathy they all want a deal.

[ncydmn]

   I don't give a discount on the first job.  Most dealers are looking for the most cost effective and profit generating avenue.  When someone comes along that will do it for less than you or give a bigger discount they forget you.  You not only want him to send you work but for him to return as well.  When he returns you can have a discount based on actual volume or referrals. 
     Remember he had you come out to the marina, measure and work up an estimate.  You probably have a minimum of one hour but more than likely closer to two in the job already.  These are non billable hours you need to figure in when you do the next job.
    Roy.

[Kathy0701]

Thanks for all your answers so far...if anyone else wants to join in, please do! 

I think I'm going to tell them not this time...it's a risk but I really did bid this job as carefully as I could...it's not like I crank up the estimate for people where I can just whack 15% off & not cut my own throat in the process.  Even if they did send me volume, it doesn't make sense that I'd be working that hard for that little money, when I am busy with other people willing to pay my price.

If I wouldn't have been such a noob, I'd have told him I already discounted, but I was surprised and not thinking on my feet.  I feel this is a bit of a game.  Roy, you're right, I think they're trying to get the lowest bidder & next time maybe (likely) it wouldn't be me.  Maybe this time, with a 15% break, it would be.  I'm not really trying to be the Walmart of the canvas industry...just want to make good canvas.  At my age entering into this business, I'm sure I don't want to be doing 12-16 hour days.  In other words, while the marina business/referrals is nice (if I would even get them, when all is said and done) I am not sure all the extra headaches are worth it.

When I started in Fall 2008, I visited that marina and let them know I was doing canvas work, etc....I didn't hear from them until this past week.  This makes me wonder if all their 'regulars' are busy & that's why they contacted me.  Either that or people are talking about my work!  I'd like to think it's the second :)  This is like almost a $6k job, so 15% is $900.  Ouch.  If they didn't send future work, I'd be out $900 & would have put other customers on hold while I got this job done.

In the meantime, I'm going to talk to a few other people I know & find out if this is real or just made up to get my bid down.  This job is going to be a bit of a pain because some of it is "parts"...some of them are missing & I'll have to fit new to old (which isn't very old at all).  Sometimes it seems that is harder to do than make all new. 

But I would like to still hear what other people think, just as a reference for all of us :)  This board is always so helpful - you have no idea how many searches some of us newer folks do on here! LOL

With many thanks,

Kathy

[baileyuph]

Kathy give the guy the benefit of doubt that he knows anything about what your cost and labor structure is;  just keep it simple:  "Tell the guy that he has the best price that you can give".

Truth is, you can't handle a volume that would justify discounting and he won't be sending it anyway.  You would have to become a manufacturer to buy materials cheap enough to discount.  The guy doesn't understand, ignore his misunderstanding and politely give him the message.  Further, he hasn't given you the job anyway, at this point from what is explained here.

Keep the answer simple, you might tell him your suppliers are indicating price increases, so in the future the prices will have to rise.  That is a good defense.

Doyle

[Rich]

When I buy materials, I pay one price for cut yardage and another, lower price per yard if I buy the whole roll (or 10+ yds. depending on the dealer). Once I establish a good business relationship (read: a fairly good volume of purchases) they may give me another price break. Just because someone is in business doesn't automatically mean you are going to be getting a good deal of business from them and that is the only reason you would want to extend a discount to them. If you end up with an occasional job from them and your cutting your price, I'd say you're getting the short end of the deal.
Rich

[Kathy0701]

Update: Called some competitors this morning.  Left a few messages (some have other day jobs) but did get hold of one gal...she told me she'd never heard of this!   :o

I'll keep you posted!

Kathy

[Can-Vas]

How about you go with the advice that the price is the best deal you can do at this time;  but if he does indeed send more business your way you will adjust your estimates accordingly...

[Kathy0701]

Yep - that is what I am going to do...let him know that I quoted what I think is a fair price for the job.  If it's too high, then someone else maybe can do it for less.  That is the honest truth so that's what he is going to get. 

...and in the future, if I do get a lot of business from him, I'll take another look.

Thanks everyone! :D 

Kathy

[Mike8560]

Just wondering Kathy are they just a Marina or are they also a new boat Dealer? here some even if not a dealor and only have a repair facilty tack on a % and bill the boat owner, so they would like to get as low a cost to them to be competitive. Ive seen some marinas that will not let you work in the marina unless you play there game. and this was bolth in NH and FL

[hdflame]

Just wondering Kathy are they just a Marina or are they also a new boat Dealer? here some even if not a dealor and only have a repair facilty tack on a % and bill the boat owner, so they would like to get as low a cost to them to be competitive. Ive seen some marinas that will not let you work in the marina unless you play there game. and this was bolth in NH and FL

This just sounds unethical and illegal to me.  Has anyone ever thought about exposing these marinas? 

[baileyuph]

I suppose the analysis should be done to shake all this out.

I will start by asking a few questions, maybe there will be enough boat business people along the coastlines (North East, Gulf, and Western) to offer a perspective of what is going on:

Questions I can think of:

Marinas - who owns and pays taxes on the shoreline and associated docks?  Most likely the marinas assumes some or most of that responsibility whether they own or lease?  Which would mean someone is paying insurance for protection.  For example, if a service person is on the premise, to work on a boat, and damages another boat, does the marina owner gather considerable liability for letting this service activity transpire?  

A viewpoint from someone from the legal sector would be beneficial.

Oh well, one more perspective to elevate:  What do the complete service shops voice about competing with this marina/canvas service arrangement?  By complete service shop, I mean one where you drive or transport the vessel to their facility where all work is performed.  That would be expensive, probably much more expensive to the boat owner, than having work performed on the marina property. 

Maybe, the marinas getting their take has some justification?  Horrible thought. 

I knew this wasn't as simple as it sounded.  LOL

Doyle