There’s no question that margins for LBM dealers are under pressure. With intense price competition for products—in local markets as well as online — a healthy percentage of dealers have decided that it’s no longer enough to simply sell products. While there are multiple reasons for dealers to sell products installed (potential higher margins on labor, boosting the margins on the sale of each product, having some control of the install, and building overall revenues and margins), there are risks, too. Like liability issues in case your worker is injured on the job, and deciding whether to use on-staff installers or hire contractors to do the work, and the chance that you’ll lose money if the project takes longer to complete than planned. Clearly, there are pros and cons. This month’s Real Issues survey aimed to capture and share insights from dealers who have faced…
THE INSTALLED SALES CHALLENGE
This month’s question comes from Tom Howley, GNH Lumber, which operates four locations in Central New York state, who wrote: “My challenge is developing an installed sales program for our company. We have been at it for three years now and growing every year, but the need to utilize subcontractors for installations is hurting our bottom line, and makes trying to schedule jobs a challenge. Love to hear what other independents are doing.”
For this issue, we took Tom’s challenge and ran with it. We sent our brief survey to the subscribers who’ve opted in to take our surveys. Thanks to the 130 readers who took the time to share their thoughts and insights. If you’d like to be sure to receive future Real Issues surveys, just drop me a note at Rick@LBMJournal.com.
First, we wanted to get a feel for the percentage of readers whose companies offer installed sales. We learned that just over 1/3 of respondents’ companies do not sell any products on an installed basis. Of those who do (as shown in chart 1), more than 60% offer this service to both homeowners and pro customers. Just short of 20% offer it to builders only, and 17% offer it to homeowners only.