Price Shopping on Supplies and Chems.

[Waxman]

I can't help it; I've got to price shop on things. Let me give you a few examples of why I find it difficult to display loyalty to any one supplier and therefore must shop around almost constantly.

1 case of latex coated mats. 500 count. $61.70 vs. $46.95

Viton Trigger and bottle. $3.80 vs. $1.99

nylon toothbrush. $2 vs. $1.29

natural hair toothbrush. $2 vs. $1.29.

carwash brush. $28.80 vs. $11.79

These are examples of little things I ordered this week. There are many others. Yes, shipping adds to the cost, but over an entire order, it definitely isn't more than the higher prices overall.

The other thing is that I know what I want. I can choose catalog items and know what I'm getting, with few surprises when the stuff comes in.

I lost a friend and former supplier over a discrepancy on an item he charged me $8.50 for when it was listed in another catalog for $2.59. I called him out on it, he got irate and said he no longer needed or wanted my business.

So, what is more important; the profitability of my business or a relationship with and loyalty to a supplier???

 

[Red Baron]

I try to roll with the punches re: my distributor's prices. I know I can get a lot of the stuff cheaper from Kleen-Rite, but I can't call a Kleen-Rite owner at home on his cell phone on a Sunday when my equipment is acting up and I need advice...I do with my dist. Plus, I'm willing to pay a little more to my distributor because he's invested tens of thousands of dollars in parts and supplies that I can drive and pick up in 20 minutes if I need it. He's invested in my success - I'm investing in his.

Course, I'm sure that's a lot less important when you live in/near a large city where you have several dist options.

 

[Waxman]

I'm not really talking about carwash parts per se, more detail supplies.

I do see your point. However, I never really got the feeling that my products suppliers were partners in my success. If they were, would they be occasionally and seemingly randomly charging 25% more for certain items?

 

[Kevin James]

I think if you have to pinch pennies like you say you are doing, searching for the lowest prices then you need to readjust what you are charging for your end product. Don?t get me wrong it?s good to compare pricing, but sometimes it can go too far. It?s my understanding that most discount houses only add 3-5% to an item, sometimes it?s more but most of the time it?s only 3-5%. That?s not a lot of profit. I know that I couldn?t survive on a 3 to 5% margin. Like Red Baron said, you need to have that relationship with your suppliers for those times of need that you?re in a bind and you need help. How much do you buy from your suppliers every year? It could be that your a small buyer and not worth his trouble. I?ve got an idea, why don?t you become a distributor of detailing supplies and chemicals and then we could all buy from you.

 

[Waxman]

Not interested in becoming a distributor.

Is the difference in all the prices I mentioned 'pinching pennies'? Looks more like dollars to me.

What is adjusted by my price shopping is my profit. With costs of everything going up, this is a necessary aspect of business. And it's not too time consuming; looking at prices on a website and cross checking against a catalog takes about 10 minutes per order. I order enough at a time so I am not price checking daily; more like monthly.


I've heard the same things in response; developing relationships with suppliers. Fine. Point taken. But back it up with a cost/benefit argument.

 

[pitzerwm]

Wax, your first job as a businessman and a family man is to make a good profit. Buying right is a component of this. Of course, things are never black and white, so weighting the value of business relationships is also an important component. I don't tolerate anyone that screws up and won't take responsibility for it and correct it.

 

[Red Baron]

I look at this from a slightly different angle, that of being a manufacturer of roofing spray rigs. Standard pricing policy in the roof equipment mfg business is to figure your raw cost, then double it and that's the price you charge. Any roofer can add up the nuts & bolts and engines and pumps and hoses and pulleys, and figure out that it costs us around $8,000 to build a rig we sell for $34,900. But there's more to the equasion than nuts & bolts - the customer gets to tap into our knowledge about how to make money in the roofing business, and they get to call us with endless stupid questions at all hours and weekends (supposedly in an emergency), which they know can save them thousands of dollars in a single day of being shut down (My dist allows my dumb questions even though being shut down won't cost me thousands).

Not to equate a car wash distributor with Warren Buffet, but would you be willing to pay $150 for a share of Berkshire Hathaway stock valued at $125, if doing so entitled you to call Buffet up and ask his investing advice? You bet! Many many times my dist has given me advice on a Saturday that, without it, would have shut me down and cost me hundreds by having wait until Monday. I don't care if his Armor All pads are $5 more per box than at Kleen-Rite.

All that said, I think you're shrewd to know your costs and look for bargains where it won't hurt you.

 

[Waxman]

Red B

Good points. I completely understand.

For too many years, I did not look at expenses closely enough and it hurt. I was focused on other things; producing high quality detail jobs, nurturing relationships with the family I then worked with, keeping the peace, and surviving. Now it's different; I'm far more p&l oriented, which means more expense oriented. My biggest costs are operational costs. In my never-ending quest for business success, prices must be checked on all items; insurance, chemicals, propane, etc. I think it's good business but I also realize it can get crazy if I let it. I will try to find a balance between price comparing being cost effective and non-cost effective.

 

[Keith Baker]

I've been on both sides of this argument. For 25 years I ran a small business rebuilding starters and alternators for industrial equipment, farm equipment and automobiles. There were some customers that never questioned prices and had access to me day and night if necessary.
Some others would buy when necessary, but you knew you weren't getting all of there business because of some other reason besides price (delivery, distance to my business, loyalty to another supplier.) I considered most of these people friends and had advice and service whenever they needed it.
And then there were the ones that would never spend a nickel with you. If you priced something fair, they wanted you to fix it for half price or show you how they could fix it themselves without spending any money. These people were rarely given much of my time or very little advice.
When I bought the car wash, I spent all of my money with one supplier only for about the first three years. Then I figured out that the advice I was getting wasn't all that great and the manufacturers for the most part could offer tech. assistance when necessary. My business is all self serve, so I don't have to worry about an automatic being down.
Now I have an account with three main suppliers, and buy some things from each of them. The competitive items I buy at the best price.
FWIW, I wouldn't have told a supplier/friend that I could get a better deal someplace else unless he opened the subject.

 

[Waxman]

I doubt he would've brought up the price of his item being higher. I had to bring it up, because I need to pay reasonably comparable prices and $8.50 vs. $2.50 isn't comparable at all. It's gouging. He took offense and ended our relationship. Fine. Saved me $$. I was nothing but nice to him, always paid my bill. He sent me an over-the top letter about what a jerk I was, etc. Very inflammatory, unprofessional and un called for. I'd love to call him out, give his nameetc. but that's not going to help.

 

[rph9168]

When I bought my Uncle's detail and car wash supply company the first thing I did was do some competitive shopping with his suppliers. He told me he had done business with most of them for many years and considered them to be his friends. After checking things out I reduced my raw materials and product costs by almost 25% by negotiating new deals and replacing some of the suppliers that were screwing my Uncle badly. I also found that by consolidating some of my purchases with a supplier made them even more responsive to my needs so I did not try to "nickel and dime" them on every little item. After that I did not change many of those I had chosen to business with because they knew I was a good account that paid on time but one that would continue to check on costs on a regular basis.

I think it is important for any business to check their costs at least twice a year to make sure they are getting decent pricing. Customer service was important to me but a good business relationship is a two way street for both the customer and the vendor. I stayed loyal as long as they kept pricing in line and maintained good service.

 

[Red Baron]

Don't get me wrong, I'm not a pushover when it comes to pricing. If I need something my dist doesn't stock and its pricey, i.e., a validator, I'll buy it where I need to buy it (Randy). I don't think that's stepping on anyone's toes.

Waxman you're right, it's a balancing act.

 

[MEP001]

I don't care if his Armor All pads are $5 more per box than at Kleen-Rite.

What if they're $30 more than Kleen-Rite?

The distributor I worked for years ago used to make an attempt to be competitive with Kleen-Rite. There were many customers who didn't mind paying the slightly higher prices for the exact reasons you cited: they could get support and personal attention. A great many of those customers still consider me a friend. That company has changed completely, and has emulated tactics of some of the larger distributor/manufacturers such as Coleman. Nothing is sold without at least a 48% profit. There's only one tech there now, he can't diagnose over the phone well, and company policy requires charging a minimun of an hour labor for phone technical help. None of the customers I've talked to that I befriended in my ten years there use them for everything anymore, and most only use them in an emergency. The general manager thinks that hiring a full-time salesman (who knows nothing at all about car washes) was the best decision to get customers back.

 

[MEP001]

I lost a friend and former supplier over a discrepancy on an item he charged me $8.50 for when it was listed in another catalog for $2.59. I called him out on it, he got irate and said he no longer needed or wanted my business.

I doubt if he was ever your friend. I've known and worked for/with people like this; they're very good at being your friend when things are going well, but they'll turn on you when you aren't making them money.

Friendship shouldn't come at a price.

 

[soapy]

I try to look at replacment parts in a couple of ways. If it is a part that I can replace on my own I will buy it at the best price from who ever and do it myself. If it is something my distributor has to install then I will usually pay him his price for the parts and labor. They have to drive a long way to see me and usually cut me a deal on travel and labor if I buy the part from them. I could hand them the same part they are going to use but I do not think it is fair to the distributor to do this. My distributor does not sell all the stuff I need so most of my stuff is purchased outside of the distributor anyway.

 

[Waxman]

I agree with you, Soapy. My carwash equipment distributor and I are truly in this together. He even sells me some of his used IBA parts inventory if I am in a bind. He is great; diagnoses over the phone at no charge, helps keep me running and washing cars always!

I was mainly referring to detail supply, carwash supply and the like. There are so many things to buy, from toilet paper and paper towels to bathroom cleansers, detail chemicals, brushes, towels, etc. that I find it necessary to comparison shop as much as is feasible. For example, if I found an IBA detergent that cost $4.19 per gallon and another is $5.50 per gallon and they both have truly equal cleaning power at my particular wash, I need to weigh the cost difference with a particular relationship. Some days I just do not know how to do that!