The holidays really sneak up on you, don’t they? It seems they come earlier every year. One day you’re looking longingly at the summer sun through your office window; and then a day later it’s snowing and you can almost swear you hear the faint sound of “Jingle Bell Rock” on someone’s cell phone ring tone. Amidst the season change and end of year hype, there is something important that you need to get ready for as a cabinet dealer. Manufacturers will soon be releasing next year’s pricing.
Cabinet dealers should begin the annual price increase cycle with a bit of a new attitude. Gone are the days when manufacturers can just push through a 3 or 4 percent cost increase. If you are a bigger customer in good standing, negotiate for a lower cost multiplier to offset any price increase. Of course, they will initially say, “No,” but don’t just accept that as the final answer. Push the issue with the VP of sales and work diligently to try and offset any price increases for your dealership. After all, we all know that not every dealer pays the same price.
Even the best negotiators will have some cost increases. For this reason, well-run dealerships will begin early (in November and December) re-pricing and renegotiating all of their sales contracts with customers who will likely be affected by manufacturer new-year price increases. Often, this step is avoided and not done out of fear that “good” customers might go with an alternate cabinet line from another dealership. Therein lies a difficult situation.
The challenge is that if you just skip passing the price increase along to your customer this year, next year’s price increase will seem that much worse! Guess what most cabinet dealers do when the following year rolls around… they skip the renegotiations yet again. And just like that – within a couple of years, your margins with that customer have dropped to the point where you cannot operate.
If you have an effective pricing program, you can get ahead of manufacturer price increases and look for creative ways to share these price increases with customers early. Doing everything by hand or with Excel will only postpone the problem and make it that much more difficult.
So now that the holidays are drawing near and 2012 is sprinting toward us, act fast. Don’t let manufacturer price increases surprise you and your customers. Negotiate on both sides early and stand your ground now – You’ll be better off later. If you’re interested in reading more on how to streamline your operations, access our free guide below.