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My HD story - Heatermon

Heatermon Member Posts: 119
After seeing all this activity on Home Depot, I thought I'd chime in. First off, many years ago (30 to be exact) our company was started to put in water heaters. Specifically, replacement water heaters under manufacturer's warranty. That's all we did, and the manufacturers' protected us by not allowing anyone else to be able to supply a water heater under warranty, in our territory, but us. They (manufacturers) allowed us to make money by charging a fair labor rate to the customers for the install. A rate that was determined by us, not them. In 1973 we charged 29.50 to install a water heater. A technician's hourly rate was 16 and a helper was 6. A service call was 12.50 for the first 1/2 hour. My dad just finished building our new house that year for 35,000. We would "mark up" all materials used by doubling their cost and had a great run of business till the 1980"s. By then, we started seeing these "homeowner friendly" supply houses start giving away warranty replacements to the consumers (with the manufacturers' approval, I might add) so that they could now shop around prices for the installs, or do it themselves and save even more. As a result, we had to develop other profitable areas to bring in business. We still did water heaters, but pretty much just for past customers who liked our services or the really difficult ones that scared off the competition. We were making a good go of it, then big orange came to town. When Home Depot first came into our area 10+ years ago, they lured away some good people from our local supply houses with promises of a great future. These people were part of the "original" HD mindset to give customer satisfaction top priority, "no matter what the cost". We were approached by them to "partner" with HD and be a part of their installation "team". We figured our prices, gave it to them and were accepted (remember, this was their first time sub-contracting, so they didn't really know what to expect) to do their installs locally. We held up our end of the bargain and were doing very nicely for the first 6 months. Then, one day, the "honeymoon" was over. Our "new" HD rep (they were expanding so fast and everyone was moving up through the ranks, so turnover at the lower levels was constant) told us he found another company that would charge 1/2 of what we were and if we didn't lower our prices, we would be out of work. At that time we were charging 150 for an install and there's no way we would go to 75, so we were let go. A couple of months later we were contacted by them because they were having trouble their new "partner". We went in again at 100 per install (a decision I still get in hot water everytime it comes up :), but we were VERY busy this time, not making money, but VERY, VERY, busy). Six months later, another call comes in from HD that they got someone willing to do it for 80 and would we come down and match? Thanks, but no, was the reply and we have been free from thier "partnership" ever since. Oh yea, we still get the calls every now and then that they are looking for someone else and if we want to "partner" again. We will always give them a price, but it is OUR price, not theirs, and, of couse, its always too high for them. Do we regret "partnering" with them? No, because we learned valuable lessons that will stay with us for a lifetime and can share with you today.

1. You have to remember that the only one who cares about you staying in business is you. (Home Depot sees you as an easily replaceable commodity, not a "partner")

2. The only way you will stay in business is by making enough money to keep it operating. (HD doesn't care what it costs you to open your doors, only how much they can make off your services)

3. The only way you can make enough money to keep a business operting is by charging sufficently to meet your expenses. (HD will prey upon the people who don't "do the math")

4. It's better to be a big fish in a small pond than a little fish in a big ocean. (Our business decisions only affect the livelihoods of a dozen or so people and are easily corrected. I'd hate to be in charge of a big company whose decisions affected thousands, maybe even millions. Hint to W/M, Trane, et al - Do you really think HD cares about your companies success? Think again. I'll bet before the ink was even dry on your contracts, HD was shopping your price around to other "competitors" trying to get a better deal! Only time will tell. Don't put all your "eggs" in the HD "basket" or you'll find out the hard way what an 800 pound gorilla will do to an egg basket. Good Luck !!!!!

From down in the trenches,

I om the Heatermon

P.S. That house dad built in 1973 just sold for 495,000 and we now charge 360 for a water heater replacement.

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  • Chris_4
    Chris_4 Member Posts: 75
    Thanks for the tips

    I have just been approached to be part of their "team". not sure if I really want the headaches!! Besides I know I charge too much for them....$525.00 for a replacement up to 50 gallon (including the heater), then there are the code upgrades that are charged extra.

    they haven't given the specifics yet as to what they pay, but I know they are not going to pay my price!!

  • Tony Conner
    Tony Conner Member Posts: 549
    It's The...

    ..."Good Cop/Bad Cop" thing. The Good Cop arrives first. Everything is wonderful. Sunshing and roses. There's the written agreement, but, as always, there are grey areas. No problem - verbal agreements are made for give and take, and things are smooth. Until...

    One day, "Good Cop" isn't there anymore. You get told he's been transferred or promoted. You're now dealing with "Bad Cop". (You don't get told that he's "Bad Cop", but you'll figure it out soon enough.) He's an entirely different animal. If it isn't written into the agreement, it isn't happening. Even if it IS in the written agreement, things get shoved ALL THE WAY OVER to a position that favours HIM. You complain that this isn't right, not the way it was done before...but it doesn't matter. You get told to take it or leave it. So anybody smart leaves. (Exactly what Bad Cop wanted.) Now it's just the sheep that can be herded as required.

    Meanwhile, "Good Cop", who as it turns out, really isn't all that "good" after all, is in a new location, assembling another flock. And he's counting down the days until he moves on, and "Bad Cop" takes over.

    Not everybody plays fair. Keep your elbows up in the corners.
  • Mark Hunt
    Mark Hunt Member Posts: 4,909

    Are you coming to TG?

    I would like to shake your hand and buy you the beverage of your choice.

    Anyone thinking about a "partnership" with a corporation would be wise to listen to the words posted here.

    All the best!!!!!

    Mark H

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  • Heatermon
    Heatermon Member Posts: 119
    Wish I could be there...but

    maybe I'll see you at REX or Las Vegas for next year's ISH. I'm afraid that I'm into too many endeavers here on the left coast to see you all. I would love to down a few and compare notes. Maybe next time.


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  • Heatermon
    Heatermon Member Posts: 119
    Don't give up on them yet

    They just might need your services right now at that price. All I'm saying is that if they do contract with you, don't depend on it for a lifetime commitment, because they will break your heart when "something better" comes along. But as long as you don't fall into their trap "Just bid it low for now and make up the difference in add-ons and volume" you may be able to get some good jobs and exposure for your company right now. They are no different than the General Contractors who can also lead you on with a carrot at the end of a stick that is always just outside your reach. You just have to know where to draw the line, and stick to your guns. There have been many a time where I think I bid jobs so low that nobody will be able to beat me, only to lose out to someone who went lower. There are also times where I think I'm so high that there's no way we will get the job, only to be awarded the contract as the "low bidder". You just never know what sells a job these days, but overall, the ability to satisfy the customer's needs, whatever they may be (price, quality, knowledge, or even just being a live person on the other end of the phone when he calls) will keep you in business as long as you want to be. By the way we charge our best customers 595 for a 50 gallon gas heater, but it comes with an 8 year guarantee. We just implemented a "Premium" install that comes with a 12 year warranty and a W.A.G.S. valve for 995. You just never know when someone is looking for "the best". Good luck on your endevers. I hope you get all the work you can handle.


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