Maximizing profit margins is one of the key aspects of running a small business. Finding areas to cut, though can sometimes be difficult. After all, you don’t want to do your client a disservice or get a reputation as someone who cuts corners. So where can you keep the same quality of work, all while boosting your final bottom line?
In the contracting and home-improvement business, material costs are one area that you can target to save money. With just a few simple steps, you can find the best prices on materials to save money and maintain your quality of work.
1. Eliminate material waste
Before you begin tracking down the best prices for materials, you should take account of how much material waste you typically have on a job.
If the amount is significant, you’ll want to figure out why you're overestimating your material costs and remedy the situation. It may be tempting to buy extra material for a specific project, but all those extra costs add up. It may take an extra trip or two to your material supplier, but your wallet will thank you later.
Material Waste Tip: Keep a journal or logbook of how much of each material you use on jobs. An example could be the number of nails used on a deck, or how much cement you use on a paving project, or exactly how many gallons of paint it takes to coat a wall. If you keep close tabs on your numbers over the span of a few projects, you should easily have enough information to better estimate waste.
2. Shop around for the best prices
Even if you’ve always shopped with a particular material supplier or hardware store, there are always other options out there with differing prices.
Just make a few calls or visit a few other vendors, and ask for basic pricing on the materials you use the most. If there’s a specialty item you feel is too expensive at a retailer, go somewhere else and ask them if they offer contractor pricing.
Don’t be afraid to use box stores like Home Depot or Lowe’s. They sometimes have better prices on certain materials. You also shouldn’t forget about farm supply stores such as Atwood’s and Tractor Supply Co., either. These chains may not have the same variety as your favorite hardware store, but they do carry the basics ー bolts, screws, tools, hinges, and industrial paints ー at reasonable rates.
This is your business, and every cent counts, so don’t be shy to shop around to try to get the best deal you can.
Shopping Tip: Approach retailers in a professional manner when seeking deals on items. Always have a business card ready, and tell them that you’re a contractor and you’re looking to get the best prices you can. You may have to speak with a manager to make any headway.
3. Try to get bulk deals
If you know there are certain materials you’ll always use no matter what the job, don’t rule out buying some items in bulk. These items should be general materials, such as nails, screws, sealers, or even basic lumber cuts you know you’ll always use.
Just approach your local hardware store or favorite materials supply shop with an offer to buy in bulk. They may be willing to give you a deal that can really slash your material costs over the long run. Remember, though, whatever you order, just make sure it’s something you use in high quantity and you know you’ll be able to use on future jobs. The last thing you want when you’re trying to save on material costs is a bulk amount of items you can’t use in the future.
Bulk Ordering Tip: If you find a bulk deal on a material, make sure you have enough room and the proper place to store it. You don’t want to order 500 boards and have them sit out in the rain and sunlight for months.
4. Don’t forget about online vendors
If you just can’t seem to make any headway with your local stores on discount pricing, don’t forget about online material ordering. You may lose the convenience and personal touch of visiting your favorite retailer, but you can make up for that loss with a potential decrease in pricing.
There are numerous online vendors that offer wholesale prices on general construction materials. Some of the most popular sites include: Fastenal, McMaster-Carr, W.W. Grainger, Master Wholesale Inc., and Alibaba. You can even order raw lumber and other materials on Amazon. And best of all, most of the orders through Amazon include free shipping.
Online Ordering Tip: The biggest downside to online ordering is the turnaround time on getting the materials. Make sure you have the timing on the job planned when using online vendors. If you’re in a bind, you may have to forego a great price on a particular item for the immediacy of brick-and-mortar stores.
5. Talk to other contractors
If you’re friends with another contractor and you happen to find yourself in a conversation with them about costs, don’t be afraid to casually ask them where to get the best deals on materials. Don’t be pushy and don’t bring up the subject if the contractor is a direct competitor of yours, but it never hurts to get expert advice from people in your line of work.