Is Buying in Bulk Really a Good Deal?
I’m sure we have all been lured into buying the value sized package at the warehouse store before. I know I have more times than I’d like to admit. Something about the feeling of getting a good deal helps us justify spending even when we may not know for sure that is the best deal on the market or the best deal for you.
In my experience, the jumbo size bag of chips ends up going stale before I can finish it. So even though I started out with a good buy per pound of chips I paid more than the regular size bag at my local market would have cost based on my need/ usage. I think we could agree some thought and cost comparison should take place even when considering buying something as simple as a bag of chips. After all, the easiest dollar to earn is the one you don’t spend.
Now apply this thought process to buying materials for a construction project. Much like grocery stores there are many ways to buy materials and many different vendors to choose from. Spending some time evaluating your needs/usage should be involved in these types of purchases as well, especially when considering buying in bulk. Buying bulk material can be a huge cost savings when it comes to the material cost itself, but here are some things to keep in mind when comparing costs.
Carrying cost/ investment:
- Usually bulk buys from a mill require upfront payment as opposed to charging material to an account that can be paid as you received funds from the project.
- Evaluate how long it will take you to use the material to get a return on your investment. Will it be used on one job or several over the course of a few months?
- Are you tying up cash that you will need in the near future?
- Keep market conditions in mind; make sure your pricing looks stable for the foreseeable future.
- How many times will you have to touch the material before it reaches it the job?
- Bulk deliveries often require you to unload the material.
- Do you have enough space in your yard to store the material? If storing on site do you need security such as temporary fencing?
- Can material be staged onsite where it will be used, or in a staging area onsite but not within easy reach?
- Will packages need to be broken down into smaller loads for delivery?
- A bulk delivery may consist of a mixture of quality that would otherwise be picked through when a lumber yard is putting together a load.
- Determine item frequency usage. It may make sense to bulk only certain items and not others.
- Consider scheduling when ordering. Bulk orders can have unexpected lead time. Running out of material or waiting on deliveries could lead to delays.
Given the number of variables to consider when making a purchase I think it’s having the knowledge to know what, when, and how much to buy that gets you the best deal, whether in bulk or not.
What are some of your considerations when securing material for a job?
Jon Wagner – Design Professional
Gould Design, Inc.