Lumber wholesalers sometimes get an unfair reputation for charging prices their customers consider to be too high. As we mentioned in our previous article, that’s because many customers don’t realize how complex a process pricing lumber can be, especially when it comes to imported lumber. Let’s continue with our hypothetical scenario about a contractor seeking to order Ipe decking materials for his latest project.
The wholesaler quotes a price for the Ipe decking required by their potential customers. The price factors in the overhead cost of breaking up the packs to find relatively small numbers of boards of different Lengths, Widths, and Thicknesses. The wholesaler, seeking to save the customer money, asks if he uses Ipe decking frequently. When he answers affirmatively, the wholesaler suggests that the contractor purchase a larger amount of Ipe decking than this particular job would require. If he does so, the wholesaler won’t have to break up the packs. This will bring the price down dramatically. The wholesaler also lets the contractor know that this time of year is a great time to buy because inventory is so high.
At this point, the contractor has an important choice to make. He can decide to purchase the larger quantity of Ipe decking at a relatively low price. He may, however, be reluctant to invest so much capital all at once while not knowing exactly how much Ipe decking he is going to end up needing throughout the season. Due to this reluctance, he may opt to purchase only the amount of Ipe decking he needs for this one job.
Let’s say that in our hypothetical case the contractor decides to be cautious and to only get the amount of Ipe decking he needs for this one project. He is completely satisfied with the quality of the product. Even though he has to pay a slightly higher price due to the wholesaler’s overhead cost of breaking up the packs of lumber, he’s still pretty happy with the price overall. That’s because he bought early in the season when inventory was high.
A month and a half later, the contractor lands several big decking projects all at the same time. He decides, based on his positive experience with the wholesaler, to call and order some more Ipe decking material. He is dismayed to find out, however, that the price quoted to him earlier in the season is no longer valid. Instead, he will have to pay a much higher price per board foot for a large order. As a former customer, he immediately calls foul.
It’s easy to understand why the customer may be confused about a drastic change in price on materials that he was able to purchase at a far more affordable price just weeks earlier. That’s why communication is so important. Hopefully, the wholesaler would have already taken the time to patiently explain to the contractor at the time of his initial purchase the whole host of factors that could drive the price up in the weeks and months ahead. In our final article in this series, we’ll look at the conclusion of our story.