Fuel Oil News

Fuel Oil News - March 2017

The home heating oil industry has a long and proud history, and Fuel Oil News has been there supporting it since 1935. It is an industry that has faced many challenges during that time. In its 77th year, Fuel Oil News is doing more than just holding

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BIO: Charlie Bursey began his long career in the oil heating industry in 1963. He has deliv- ered coal, kerosene and oil and serviced heating and cooling equipment. He has also managed service departments, worked for a manufacturer and currently works with F.W. Webb, Warwick, R.I. He is a recipient of the Association of Oil & Energy Service Professionals' pres- tigious Hugh McKee Award for making an outstanding contri- bution to the fuel oil industry; having had an understanding and cooperation with his fellow man; and having unselfishly aided the industry in education and related activities. CONTACT: ChasBursey@aol.com Charles Bursey, Sr. SERVICE 50 MARCH 2017 | FUEL OIL NEWS | www.fueloilnews.com DURING MY CAREER, I HAVE HEARD THE term "price shopper" on many occasions and have often wondered about its real meaning. Recently I asked for a definition from the shopper closest to me: my wife. After first establishing that I'm not a shopper (agreed), she provided a simple description of herself in price shopper mode: She looks for items that will save us $$$. She said that she knows which stores have the best quality and she will often get special promotions in the mail. She mentioned that around Thanksgiving there is a sale called Black Friday, where the real price shoppers arrive at the store at 4 a.m. to beat the crowd. (From what I've seen on the TV news, this so-called BF is simply a human stampede.) The more I thought about the term "price shop- per," I realized how the label applies in our industry. On a regular basis, I talk with HVAC and plumbing contractors regarding specific jobs that require a bid that includes both material and pric- ing. Even though wholesale suppliers attempt to give their best price, contractors often find it a challenge to sell a job, as customers raise pricing or quality issues. There are times when a contractor may divulge another supplier's pricing list for materials, and the prices on other supplier's list may be less for the same job. The price of a supplier's products will be based on what is referred to as a GP (gross profit) which is the same factor that the contractor uses when pricing his or her customer's job. I will agree there are times when a contractor, after reviewing a specific job, deems it necessary to increase or lower a bid. If this is the case, suppliers can be grateful when their contractor gives them a second opportunity. What is the correct profit percentage used when pricing a product or job? I can't truthfully answer, because there are too many variations. But what I can say is that the GP should be based on the expenses required to meet overhead, includ- ing payroll, taxes, insurance, vehicle repairs, replacement, possible future growth through diversification, etc. I know that the internet has changed the nature of sales and marketing and has dramati- cally heightened competition in today's business world, including in HVAC and plumbing. Not a week goes by that I don't hear a price shopper say that he can buy a product from Amazon cheaper. But what happens when the item purchased through Amazon fails? What about tech support? And can the failed item be returned immediately for full credit? When it comes to your supplier, before always challenging him on pricing, ask yourself these questions: If the answer to each of these questions is yes, then ask yourself: Is price shopping necessary? Think of the time lost and the effort expended on being a price shopper. My suggestion is to stick with the supplier that provides all that I previously mentioned. l F O N The Price Shopper Do they stock what I need? Do they have the volume required in stock? Can they deliver when and where I need it? Do they offer technical support? Do they offer good-quality products? Do they have self- service buying from shelves that are both clean and well-stocked? The price of a supplier's products will be based on what is referred to as a GP (gross profit) which is the same factor that the contractor uses when pricing his or her customer's job.

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