I am in the process of bidding to supply Pre-fabficated EPS wall panels to a local architect for his personal residence. It is located in an area of Pa. that is in close proximity to the very wealthy Main Line area just outside of Philadelphia city limits. If I get this project it will be used as a show house and allow me to invite many fo the high end builders in the area to see my product. Also I believe once the architect has used it on his home the possibility of him recommending this product to his customers would be greater.Also the builder that is being used by the architect would become familiar with the product. Would anyone do this project at cost just to get this exposure for a new building product or should a profit be made. I am leaning toward doing it at cost. This will be the 5th house I have done for architects for their personal residences which makes for good references.
All responses will be greatly appreciated.
John Giuliani
Nascor Building Systems of Pa.
Replies
Maybe. If by cost you mean total cost of material (and whatever associated labor), and overhead and contingency to cover oops'es (shipping damages, mis-measurements, etc). Maybe reduce your actual profit to slimmist possible margin. Sounds a little risky, doing work for nothing with the possible opportunity to show the work to others.
How much business did you get off the first four houses? That should be a big factor in your decision.
Edited 7/20/2002 12:54:02 PM ET by ELCID72
I'd be a little concerned about how much exposure you'll actually get.
I've worked for many truss companies who were asked to cut special deals on "show" houses. At best, we got a sign stuck somewhere in the house which people might possibly see while they were walking through it.
The worst one had a whole bunch of mistakes in the print. The GC tried to stick us with a huge backcharge to try to cover his losses on the job.
I would seriously question the value of "show" houses in general. But it also depends on your relationship with the guy and his reputation. Only you can tell that.
Gray hair is heriditary - You get it from your kids.
Boss Hog,
I do understand where you are coming from but the product I am promoting is a little unique. I like to consider it a Hybrid of SIP panels and stick framing. I just completed a 24,000 square foot chuch that the members assembled themselves with the agreement that I could bring prospective clients and builders around anytime to see it. It worked out very well. When you are showing off roof trusses there are manufacturers everywhere doing the same product. My panels are manufactured in Canada and they are very thorough with the design work, so the chances of mistakes are very slim.
As far as getting backcharged, it has only happened once when the framing crew was waiting to unload the panels and truck was 4 hours late. The trucking company paid for that because I sepcifically infomed that a crew will be waiting for the shipment. So far I have been lucky in the 12 years I have been doing this. Only one client I had any problems with. The rest are still close friends that I stay in touch with.
Thanks for the input.
John
By cost I mean as you say the hard costs to me and a little to cover my expenses as I will be on site to instruct framing crew how to install panels.(about a 1 hour learning curve) My manufacturer is very exact in the design stage and the chances of mistakes are rare.
The first house I did for an architect in Minneapolis actually led me to being involved in a show on panelized construction for DIscovery Channel along side Superior Walls which led to the engineer that stamped plans for the show as the panels come from Canada. And that led to a project I am currently working on in Minneapolis that could mean several hundred homes. And from the engineers house a referral for his brother building a home in Bismarck,ND. It has definately worked to my advantage.
Comments much appreciated,
John
Basically what you want to do is use some of your marketing budget to compensate for your desired profit on the aforementioned job. Figure the job conventionally, then consider the transfer of the amount from the marketing budget to the profit category. Is it more effective than other forms of marketing? If your bang for the buck is greater this way, do it. If not, continue as usual.Jon Blakemore
I know people who have signed no compete agreements with the company they work for, and did not get a contract in return. I would want him to sign a contract that you would be the only one he would reccomend for a period of time, or an estimated amount of work. Clearly a business deal out on the table. Tell him in certain terms what you want in a signed contract. Both will benifit. I wouldnt take his word at all. In god we trust, all others sign the contract .
I think Ive covered the signed contract part of it .
Tim Mooney
Edited 7/21/2002 12:55:30 AM ET by Tim Mooney
Edited 7/21/2002 12:58:29 AM ET by Tim Mooney
Tim & John,
The idea of some sort of contract may be what I need. I have not yet submitted the bid but when I do I will bring up this possibility. One of my strongest beliefs it to make it a win/win situation for both parties.
The idea of transfering marketing budget into the profit is also a possibility. All of the responses I have received are of great help, but making the desision a little difficult.
I was also thinking of submitting the bid with the usual profit margins built in and see what type of reaction I get. If he believes it is too high I can make the counter offer with some other provisions worked into the deal.
Thanks again. Will let all how I make out.
John Giuliani
Nascor Building Systems of Pa.
I would, if I must, give a commission on sales that can be directly traced to the customer in question. I've been there and made next to nothing on so called "i'll recomend you" deals.
If your product is as unique as you imply, and I have no reason to doubt you, he should be glad to get it without paying a premium. Why at no profit? See the thread on perceived value for a better explanation than I can give. If the TV show and the four other architects homes don"t already give you more than you can do, I am not sure that another freeby is going to make the difference. Maybe charge full, and then give refferral fees on the "to come" work. So if it does happen in the future then he gets even and you stay happy in the meantime! Just thoughts
Dan