Use Rebates, Tax Laws and Retainers to Discover Profit Boosters
There's extra money to be made beyond that which comes from selling kitchen and bath projects and upselling your customers. Indeed, if kitchen and bath dealers take the time to negotiate rebates, understand tax laws and generate design retainers, they could boost their profit margins without investing a dime.
That's the belief of Gary Callier of Callier & Thompson Kitchens and Baths. A dealer-member of the Houston, TX-based Bath & Kitchen Buying Group (BKBG), he advised other BKBG dealer-members on how to uncover and use hidden profit boosters to their advantage at a recent educational conference sponsored by the member-owned co-op.
First and foremost, Callier stressed the importance of negotiating rebates with all of your suppliers. "Ask your suppliers for better terms, as well," he adds. "Ask for 3% net 5 days instead of 2% net 10 days. And, never miss a discount."
Next, he advised kitchen and bath dealers to call a local tax attorney. "When you speak to the attorney, find out if you qualify as a contractor/retailer for a different tax rate than what you are currently being charged," he says. "Additionally, see if there are monies due you from the state for overpayment of tax."
Other ways to boost your profits, says Callier, include the following:
- Put you money into a sweep account instead of a checking
account. Check with your bank on how this works.
- Use retainer fees for your work. "You will be surprised how
much money is left over from clients who retained your services,
but never bought from your company," notes Callier.
- Change your discount, and give yourself a price increase. With only a 2% increase you will generate a 3.5% additional profit, says Callier.