Author: Brett Knox
November 15, 2024 - 3 MIN. READ
High costs have been a reality for contractors since the pandemic. Spending more on supplies often means struggling with placing competitive bids and seeing profit margins shrink.
In an environment where inflation and supply chain challenges are persistent, building a buying process that secures your access to lower prices through bulk buying is a sound strategy.
Costs sharply increased during the pandemic for most construction materials due to bottlenecks in production and shipping.
Unfortunately, these high costs have not subsided. Inflation is still relatively high with an annual rate of 2.4% as of September 2024, but other factors are at play.
Certain sectors of the economy, such as data centers and the energy transformation, are doing extremely well. These sectors are investing in new construction and other projects, driving demand up for raw materials like copper, which are hitting record prices.
Shipping is still challenging. Port congestion is an ongoing issue globally, and turmoil in the Red Sea is affecting as many as 30% of shipments, resulting in high freight costs and delays.
These factors result in an increase of 40% or more for some material categories like switchgear or steel bars compared to pre-COVID prices.
While there are early signs of inflation cooling down, material prices are influenced by a wide range of factors. Lower inflation alone will not restore profit margins.
Bulk buying is the practice of purchasing large quantities of supplies. Contractors who buy in bulk can access lower prices for three reasons:
Bulk buying can also help streamline your buying process by consolidating your purchases into a few large orders instead of multiple smaller purchases.
As a contractor, you can get started by bulk buying by shopping for multiple projects at once. If you have a strong sales pipeline and can secure jobs ahead of time, buying all the supplies you need at the same time will help you save.
You can also focus on essentials and frequently used supplies to stock up for future projects.
Maximize the benefits of bulk buying by joining a buying group. While purchasing for multiple projects at once is a good start, forecasting future needs can be challenging. Additionally, managing a large inventory requires storage and additional costs.
Group buying is an easier way to access all the benefits of bulk buying. With this approach, you’re combining your buying power with other contractors and placing orders together.
You’re leveraging a much larger buying power, commanding the attention of suppliers, and unlocking discounts consistently.
Group buying has several other advantages:
With group buying, experts handle the negotiations with suppliers and get lower prices and better terms in writing.
You won’t have to negotiate independently, and you’ll know exactly how much you’ll save.
The best buying groups work with networks of suppliers. From major manufacturers to specialty brands, you’ll have access to everything you need in one convenient marketplace.
This approach gives you access to a wide range of options for all the materials and parts you need, allowing you to shop around and compare prices. Plus, if a part is out of stock, you can easily find a replacement.
By commanding the attention of suppliers, buying groups can typically secure better lead times and accurate information about product availability.
For contractors like you, it means being able to give customers realistic time estimates and seeking alternatives early on if a part is going to be delayed.
On top of saving you money and increasing your profit margins, bulk buying is the answer to making your buying process more effective.
With no sign of high contractor costs going away anytime soon, finding a solution to your shrinking profit margins should be a priority. Once you have your costs under control, you’ll see profits increase and be free to reinvest that money into growing your business.
As an electrical contractor, you can win more bids and increase profits by paying less for electrical materials and equipment as well as business essentials.
Unlock unparalleled savings and streamline your procurement process with Raiven. We allow contractors to consolidate their purchasing power to negotiate exclusive discounts, favorable service terms, and priority access to supply chains. Say goodbye to the hassle of negotiating with multiple suppliers and enjoy significant cost savings on wire, panels, conduit, EV charging stations, lighting, load shedding, tools, and more.
Gain access to pre-negotiated discounts of 7%-30% from industry-leading manufacturers and distributors, including Alpscontrols, ChargePoint, EnelX/Juicebox, Ferguson, Grainger, Graybar, HD Supply, Home Depot, Lowe’s, Office Depot, Sunbelt Rentals, Schneider Electric, and more!
Raiven is the go-to partner for electrical contractors, providing unbeatable prices on equipment, parts, and maintenance supplies. Our intuitive purchasing platform streamlines procurement for maximum efficiency. Other key benefits:
Raiven is your one stop shop to save time and money. Visit Raiven to learn more about saving and growing your profit margins with our buying program for contractors.
Summary: materials costs have been high since the pandemic and show no signs of going back down. For contractors, bulk buying could be the answer to thriving in this difficult environment and seeing profit margins increase again.