‘Makeovers are exciting’, say all houses, and we agree!
Renovating a house is an enthralling experience. Visualising the changes and bringing them to life is both dreamy and satisfying, isn’t it?
Well, as hunky dory as it may sound, it does require one to break a sweat! Homes involve dedication, effort, and substantial investment for construction, upkeep, and refurbishment.
During renovation, every effort counts, and every cost incurred is calculated! From the labour cost to machine cost to raw materials consumed, everything is kept in mind, and an estimate is made using various costing methods.
Once the costs are calculated, a quote is provided to the client, followed by negotiations. Then sourcing of labour, raw materials, and machinery is carried out. The realtor aims to source items at a lower cost while maintaining quality, ensuring increased profit margins.
While calculating costs, you will realise material cost makes the project expensive. So, how does one secure a better price from the supplier? We’re here with some tips to help you get the best price for raw materials and enhance overall profitability:
- Bulk Buying
The concept of bulk buying involves purchasing goods in large quantities from a supplier, typically a wholesaler or manufacturer.
What are the benefits of bulk buying?
Bulk purchases offer advantages for both the buyer and the supplier. In this situation, the transportation cost per unit decreases with large orders, benefiting both parties.
Remember:
– Having a steady supply chain at the renovation site ensures that we won’t run out of raw materials during the project.
– Purchasing in large quantities may seem more expensive, but when divided, the cost per unit reduces, leading to an enhanced profit margin.
– This situation also helps build a long-term relationship with the supplier, as it builds trust at both ends.
– Ordering in volumes significantly reduces packaging waste and makes it an eco-friendly deal.
- Research compare and negotiate
It’s not advisable to rely on just one supplier. You should research and compare pricing from multiple suppliers.
What to do:
Create a Request for Proposal (RFP) outlining project details so potential suppliers understand project needs. After issuing the RFP, collect bids from suppliers and evaluate them based on:
– Quality: Ensuring the best results without compromising quality
– Quantity: Reducing cost per unit of raw material
– Cost: Increasing profit margins
– Delivery timelines: Crucial for maintaining schedules
These factors help balance the overall value of the project, and multiple bids allow you to understand market prices and negotiate the final bid. Once you have multiple bids, negotiate with potential suppliers to match prices while expressing interest in building a long-term relationship with them.
- Understand market fluctuations
It’s important to note that the price of raw materials fluctuates based on market trends, location, and other economic factors. Understanding these fluctuations is crucial for making purchases when the prices have significantly dropped.
You should also keep an eye out for sale periods when these materials are offered at lower prices. Having such information is crucial for effectively cutting costs.
For instance, the cost of cement decreased by 11% from 2022 to 2023. This was due to post-COVID-19 conditions. Another example tells us how the price of raw material in Hyderabad which is at 1500sqft is different from that in Delhi which is 2700.
A few other things to keep in mind are: –
– If you have existing relationships with vendors, leverage them for prompt cost adjustments and credible sources.
– Negotiate politely with suppliers to get the best deal by collecting information and making justifiable negotiations.
– Be confident and prepared to walk away from a deal if it’s not convincing. This puts the ball in the supplier’s court and may lead to further negotiations.
Now that you have these tips and tricks, you’re ready for a successful sourcing experience. Once the raw materials are sourced, the renovation work can begin!