Ideas Offered For Dealer Profit Margin Improvements

Ideas Offered For Dealer Profit Margin Improvements

Kitchen and bath dealers, who often operate below acceptable industry standards when it comes to profit margins, can improve their margins by incorporating a number of ideas.

That's the advice of kitchen/bath industry business management consultants and trainers Hank Darlington and Steve Vlachos, CKD. The pair who lead the "Managing for Profit" conference series jointly sponsored by Kitchen & Bath Design News and the National Kitchen & Bath Association offer the following suggestions for margin improvement:

  • Immediately add 1%-2% to the sell price.

  • In six months, add another 1% to 2%.

  • Do change orders and add-ons at a higher margin, and focus on the sales of add-ons.

  • Be sure to add in a contingency margin.

  • Don't use only whole and round numbers (5%, 10%, 15%) for pricing.

  • Charge a delivery fee.

  • Know and shop your competitors.

  • Train salespeople on how to sell for margin.

  • Tie compensation to margin. 

  • Cover freight and add a little.

  • If you have to hold any product because the job is late, collect the amount due and charge a "holding fee."

Kitchen and bath dealers, Vlachos and Darlington contend, should also focus on sales of their most profitable items and continually attempt to negotiate the best possible deals with vendors.