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Price Hike: Here Are Some Things to do to Even the Playing Field

Price Hike: Here Are Some Things to do to Even the Playing Field

Many economists analyze the economic policies of the Biden administration and conclude that inflation is an almost forgone conclusion. Regardless, we are already seeing an increase in HVAC and gas prices. Here are seven things you can do to help yourself.

Increase prices now

If you think your costs will go up in the next few months, don't wait to raise your prices. Raise them up now. Increase them to the level at which you will keep the target net income below the expected cost structure.

Track price changes and make changes quickly. Pay attention to the commodity metal futures markets. They will tell you what to expect. At present, they are reporting higher prices for steel and copper products.

Remember that everything is negotiable.

Just because a manufacturer announces a price increase does not mean you should receive that price increase. Negotiate. Find out what you can do to justify holding off the price increase for your business. If you hope to grow, share your growth plans. Can you give a manufacturer more stake in your business? Will the manufacturer pay you a discount to compensate for the price increase? Can more cooperation with fewer restrictions offset the price increase, or can it be applied creatively?

Floor Plan

With the exception of some rural markets, floor planning is generally not recommended. However, when prices go up, it can make sense. This is all the more true if there are specialties at the start of the season. Remember that everything is negotiable; ask the manufacturer to finance your floor plan. Consider asking the manufacturer to agree to rebalance the inventory after a few months to replace the slow-rotating units with the best-selling ones.


A funded floor plan equals one delivery, so why don't we just deliver the parts and inventory? Many vendors will even offer vendor-managed inventory solutions if they are large enough, which can further reduce costs as the vendor acts as the on-site warehouse manager.

If you are operating under an S-corp or an LLC, it is especially important to protect as much business income as possible legally.

If you do consign, try to price it based on the day the stock was delivered, no matter when you are using it. While consignment is a benefit to you, it is also an efficient extension of your supplier's storage space, so keeping price levels constant is not a big deal.

Do some tax planning.

There is a good chance that Congress will approve a significant tax increase, which will take effect in 2022. Suppose you are operating under a pass-through tax structure, such as an S Corporation or an LLC. In that case, it is particularly important to take steps to shield as much business income as possible legally. Work with a good CPA or tax professional such as PAT RASKOB to explore all the legitimate approaches you can take. Work on it now. Make sure you take the opportunity to invest in the year of purchase. In other words, make as many truck and equipment purchases as possible by 2022.

Change equipment lines

Make sure you buy from a reseller who values your business. Otherwise, go shopping. Remember that what matters is the mark on the truck, not the mark on the box. You can do well to sell any brand you want. Can you get better prices and/or better service from another supplier?

Join a buying group

There are literally thousands of entrepreneurs who belong to one of the industry's buying groups. These entrepreneurs receive cash rebates for purchases in some cases, training credits, or services in others. If you are not in a buying group, you are paying more than your competition. The playing field is not level.



Pat Raskob
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