Marketing Mastery: Commanding margins of 40%-50%—or more

Home Columns Marketing Mastery: Commanding margins of 40%-50%—or more

May 26/June 2, 2014; Volume 27/Number 28

By Jim Augustus Armstrong

(First of three parts)

During several of FCNews’ Marketing Mastery webinars I host with Dustin Aaronson, I have asked attendees if customers are more price sensitive than 10 years ago. The overwhelming response is always a resounding “Yes!”

Most dealers have felt a big increase in downward price pressure since 2008. Here are some typical price-pressure dramas dealers face every day. How many sound familiar?

• You lose another sale because you can’t match Home Depot’s “$39 Installation.”  You know it’s a big lie; Home Depot marks up its products to make up the difference. Try telling that to customers when they’ve got “$39” on the brain.

• You spend $8,000 on a full-color newspaper circular and the only response you get is from a lady who wants vinyl for a tiny bathroom in her rental. After she blows an hour of your time having you haul out samples and giving her prices, she says she’s going to “check around” and get back to you.

• You lose another sale to a flooring installer who sells products out of his truck at “cost” just to get the installation work.

• You’ve been working with a distributor for years. You thought it was on your side. One day you find out it is selling directly to the public and undercutting your prices.

If you found yourself nodding your head to any of these, you are not alone. With competition from box stores, cheap-price chains and online discounters, many dealers feel they’ve got a gun to their heads, forcing them to slash their prices just to survive.

But not every dealer succumbs to downward price pressure. Savvy retailers across the U.S. and Canada are commanding premium prices regardless of market conditions or the presence of Home Depot. Here are just a few examples:

“I’m now getting margins of at least 50% on everything I sell,” Garry, a floor dealer from Illinois, told me. “And I’m even busier than before I raised my prices.” Garry had recently raised his prices by 30% or more across the board, and he did it virtually overnight.

Mark, a dealer from Illinois, took his flooring business from near bankruptcy to doing over $3 million in revenue last year. This year he is on track to do between $4 million and $5 million. His residential remodel margins are at 40% and above.

These dealers—and others I’ve worked with—have proven there is a better way, and they’ve proven it during a period in which consumers have become more price sensitive than ever.

There are three specific strategies these dealers have implemented that allow them to charge essentially whatever they want for their products. Over the next several installments I’m going to cover these strategies in detail. But the most important thing to realize is that you do not have to resort to price slashing in order to compete. If your prices are currently lower than you’d like them to be, and you like the idea of escaping the “cheap-price” rat race of doom forever, stay tuned.

Must Read

Annual Product Guide 2022

As supply chain slowdowns eased, flooring manufacturers got back to the business of delivering winning products to their flooring retailers. Indeed, FCNews’ 2022 Annual...

Happy Feet welcomes three new hires

Chattanooga, Tenn.—Happy Feet International, a producer of luxury vinyl plank and tile headquartered here, welcomed three team members to its management team. Scott Jones,...

NAFCD Annual Convention welcomes new exhibitors

Chicago—The 2022 NAFCD + NBMDA Annual Convention is taking place here November 1–3. During this event, distribution executives will have the opportunity to grow...

Shaw recognized as a ‘Best Employer’ in 2022

Dalton—Shaw Industries has been voted the 2022 "Best of the Best Employer for Industrial Manufacturing" in the Chattanooga Times Free Press’ people’s choice awards....

FCEF partners with Taylor Adhesives

Dalton—The Floor Covering Education Foundation (FCEF) has partnered with Taylor Adhesives, a leader in high-quality flooring adhesives and substrate coatings, to help grow technical...

Mapei’s Brittany Storm named LEED Fellow 2022

Deerfield, Fla.—Mapei Corporation’s sustainability manager, Brittany Storm, has been selected to the 2022 class of LEED Fellows by the U.S. Green Building Council (USGBC)...
Some text some message..