There has been much discussion over the past couple of weeks about pricing both on a national scale and locally. We saw this week the trouble at Uniglaze, which then sparked conversations on here, and on Twitter, about the way the industry goes about it’s pricing. Lets face it guys and gals, a lot of the time, we make our own mess!
Our industry and economy is going through a period of readjustment where we are getting to grips with higher costs, better product options, consolidation of companies within bigger ones and tighter credit lines. In order to adjust, we as businesses need to make sure we make enough profit out of what we sell to cope with this. However, at the moment, in areas, that common sense doesn’t seem to be prevailing.
I have seen it in the area I work in. There are quite a few double glazing companies in and around here, and competition is quite stiff. However most of the business sell purely on price, not on quality or professionalism. Undercutting is a terrible problem here. We go see customers who have had 3 or 4 quotes from different companies, all getting lower and lower. We are routinely the most expensive. Not because we like to be, but because the product we use is very high quality and we are determined to make something out of the job. At the moment, businesses are petrified of cost, doing it for next to nothing, forcing the other businesses around them to do the same and drive the cost of our wares down. It’s a terrible spiral that will eventually catch some businesses out.
Look at it this way. 10-15 years ago, you could buy a family saloon car for about £7-£10k. Now, a decent family car will set you back a good £18k. Here’s the problem, a house full of windows and doors today costs roughly the same as it did a decade ago! While everything around us has gone up significantly in price, the prices of windows and doors has remained depressed because of our inherent nature of fear of price increases. So while costs around us have been going up, our profit margins have been coming down, eaten away due to many business’s reluctance to pass on price increases. It’s harming both the business, the local industry and the industry as a whole and it’s got to stop.
It’s time for our industry to grow a pair. While turnover is important, profit is imperative. Many businesses, big and small, seem to have taken their eye of the profit margin and it’s really starting to tell now. One of the basic principle of business is to make a profit, yet our industry is making it so difficult for itself by not passing on price increases to the end user, therefore eating away at margins. Plus, customers expect prices to go up! They’re an educated bunch you know! They understand that we’re in a recession and that inflation has an actual effect on the cost of things. Try restoring your profit margins to what they once were, it won’t harm you!
The number of companies in this sector that appear to be trading on the strength of customer deposits is scary. Looking at D&B reports on many of them makes for incredulity… And they are damaging to everyone in the industry – as you point out, because customers think that they can buy windows cheaper (and – very mistakenly – that all windows are pretty much the same) they will do so, forcing more sensible companies to lower their margins to try to not lose business. Which forces the better companies into dangerous positions, too. Before I came into this industry… Read more »
Classic example last week. Went to quote a customer who had his upstairs windows fitted back in 1986 & was changing them again. We quoted £2300 another company £2000 & another £2380. We are by no means the cheapest or most expensive we normally float somewhere in the middle. The customer showed me the quote from 1986 for the same windows £2200, £100 inflation in 25 years. Now either the profit margins were exceedingly good back then or they’re exceedingly bad now. Bit if both I think. But what other industry could this happen to where the product actually gets… Read more »
Probable difference is that in 1986 there probably wasn’t the number of companies out there supplying windows – and judging by the stories I hear of how much salespeople, surveyors and fitters made back then, there were some fat margins. In the intervening years the number of small companies that have sprung up run by former fitters and/or salespeople from the national firms must have become legion. All of them probably thinking (originally) that they can do what their former employers did but on a local basis and can do so at a reduced cost – How often does a… Read more »
We have the same problem in the Doncaster area, many companies seem to be installing a full house of windows with only a weeks wage for them as profit. So how are they going to honor the guarantee? The simple answer is that they will have no intentions of putting any problems right. We have a local company in our area that has been out of business nearly ten times in ten years! These are a company who always try to be the cheapest and offer little in the way of quality or business ethics!