Discounts for Builders

      Should a cabinetmaker offer a "contractor's discount" to builder customers? May 4, 2005

Question
Our shop builds mostly kitchen cabinets and built-ins. About half are directly with homeowners and half are through contractors. Does anyone give a contractor's discount or other incentive to builders? There is not a very high profit margin in this business. Giving a percent off the top would cut deeply into the profit. What are your thoughts on this?

Forum Responses
(Business Forum)
From contributor B:
We are in the same situation. About a year ago I switched from giving contractor's a discount to just giving them a straight up price. I still have a few that like to see that discount, so I just mark up the price and give them a discount to where I need to be. I will give a contractor that does a lot of business with me a better price - only if they are prompt with their payments. Cash flow is key and there are a few builders I charge a higher price to because they like to string the payment out two months.



From contributor J:
I'm pretty much in the same boat you are - 75% builders and 25% homeowners doing their own contracting. I don't discount to builders, but I do charge homeowners 5 - 10% more than a builder. I do this with my installation charge, adjusting accordingly, whether builder, homeowner, slow pays, fast pay, if we are snowed under or need some work, if there is a Hummer parked in the garage, etc.


From contributor K:
Discount to contractors? Hell No! I get 50% down before any work begins, and I get 100% of the remainder before the cabinets are unloaded at the job site, no exceptions. This keeps the cash flow positive, and eliminates deadbeats and slow payers. I don't have time to chase a contractor down from jobsite to jobsite trying to collect just to get another excuse. It's all in the contract they sign. So far it has worked great, and the only ones I have lost are the few who were the slow payers. I am a cabinetmaker, not a banker, and it's not my goal to loan a GC money, which is what in effect I was doing until I started getting serious with them.

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  • KnowledgeBase: Business: Estimating/Accounting/Profitability

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