At what point does a value-added service effectively work against us? One prime example is material takeoffs, which most LBM dealers provide to their builder customers either for free or for a modest fee. On the one hand, takeoffs are a service that, in many cases, builders have come to rely upon, and they’re another potential differentiator from our competitors. On the other hand, doing the takeoffs for builders can effectively transfer the responsibility for budget overages from the builder to the supplier. The reader who suggested this month’s question states that “doing material takeoffs has become our single biggest challenge.”
This month’s question came from a dealer in the Pacific Northwest, who wrote: “In my view, doing material takeoffs has become our single biggest challenge. By doing material takeoffs, we have placed the responsibility of the material going into the home from the builder to us. When a builder goes over budget, they want to hold us responsible. I believe we must, slowly but surely, make the material takeoff the responsibility of the builder once again. What do other dealers think about this issue?”
From the greater than normal response this month’s survey, which we emailed to subscribers who have opted in to receive our messages, the question of takeoffs is a problem that many dealers wrestle with. A big thank you to the 200-plus readers who weighed in on this issue, many of whom wrote detailed responses. If you’d like to participate in future Real Issues surveys, drop me a note at Rick@LBMJournal.com, and I’ll make sure we get you added to our email list.
We knew that most readers offer takeoff services, but we didn’t know an exact percentage, so we kicked off this month’s survey by asking:
“Does your company do material takeoffs?”
As the graphs show, the majority of respondents, both fullline LBM dealers as well as specialty dealers/distributors (i.e. roofing and siding, windows and doors, etc.), provide takeoffs.
Graph 1 shows that the vast majority of LBM dealer respondents (94.5%) offer takeoffs, leaving just 5.5% who don’t. Of those who do provide takeoffs, 87.0% do them at no charge, while 7.5% of respondents charge a fee. A slightly lower percentage of specialty dealers/distributors offer takeoffs (84.9%), and of those, 9.1% charge a fee. The remaining 75.8% provide them at no charge (Graph 2).
“Contractors expect LBM dealers to do a takeoff free of charge. Then, if they get the job, the contractor takes our takeoff and provides our list to other yards, even though we saved him money by doing his work. He takes our prices and tries to beat them—and will not even pay a small amount for us to provide a takeoff for them. That’s why we say no to contractor takeoffs.”
“Too many different interpretations as to where the specified lumber is to be used. For example, framers cut long dimension lumber intended to be used for plate stock, then claim there was no plate stock.”
“Liability, and consistency. Every customer has a different philosophy in the construction process, so introducing our own caused problems in the past.”
“If you do takeoffs for a fee, how much do you charge?”
Next, of those dealers who do charge for doing takeoffs, we wanted to know how much. The amounts charged range from $50-$500 per takeoff, while a couple of respondents charge per square foot. See representative answers below.
“Between no charge and $500, depending on the circumstances.”
“Up to $200 for cash customers, no charge for house accounts.”
“It ranges from $50 to $500.”
“We charge $50, which the customer receives back on the first lumber load.”
“We charge $.15-.20 per square foot.”
“If you don’t do material takeoffs, why not?”
Since the majority of readers do offer takeoffs, we wanted to learn why the minority—just 5.5% of LBM dealers and 15.2% of specialty dealers/distibutors— choose not to. Sample answers included:
“If there is a mistake, we would have to take the hit.”
“Too time consuming. Hard to do when you are so busy with so many other interruptions. Not doing takeoffs eliminates any issues with shortages, overages or just getting the wrong product.”
“We do not have anyone with experience in material takeoffs.”
“In my view, doing material takeoffs has become our single biggest challenge. By doing material takeoffs, we have placed the responsibility of the material going into the home from the builder to us. When a builder goes over budget, they want to hold us responsible. I believe we must, slowly but surely, make the material takeoff the responsibility of the builder once again.” Agree? Disagree?
“Agree, and it works the other way too. If you figure overage, it can come back to you for losing the job.”
“I agree with material takeoffs being our single biggest challenge.”
“That would be very nice, just not sure how you make that happen.”
“I disagree. I would love to have our builders do all their own takeoffs, but we deal with builders who are not as fast as the bigger crews or companies. If I can increase some of our sales by getting takeoffs done for them, I will keep doing them. This gives them more time to get their projects done faster. I also have sign-off sheets and comments making sure they understand that it is just an estimate. They are responsible to double-check my material list.”
“Absolutely agree! Takeoffs for free is insane. Customers take advantage of this free service, which has made them lazy.”