Do you pass your discounts on to the client?

[Macmann]

This issue arose during a home improvement project but caused a larger discussion that would encompass all business owners as well. I have a "friend" who had a roofing job quoted at 20k. The contract was signed and the work proceeded as quoted, resulting in a beautiful new roof. It was later discovered that the contractor got an 11% rebate on the materials used for the project. This bothered my friend and he felt that HE should be the beneficiary of the rebate and has requested it from the contractor, saying that it is HIS since he paid for the materials. Is he being unreasonable or does the contractor owe him the proceeds of the rebate? Hypothetically of course ;-)

 

[chriscozi]

Would depend on the wording of the rebate offer. Some say 'owner' some say 'purchaser'.
Usually the warranty says owner and sometimes the rebate is tied to the warranty.
Contractors routinely get 'purchaser' discounts that 'owners' won't ever see.
Think wholesale vs retail.

 

[Macmann]

chriscozi I understand the owner/purchaser and contractor discount aspects of the issue.

What feels right to you?

Thanks

 

[kdw75]

In a case like this I would say that it is silly for the end user to expect a discount. Even if there was no contract.

 

[Macmann]

To me, this is no different than quoting a print job and the client agrees to the price. Then, the printer gets a great deal on the stock and prints the job for a lower than the agreed-upon price. Is it then his duty to give the client the break they received on the stock or does the savings go to the company's bottom line? Is this a question of business ethics or just a customer with unreasonable expectations?

 

[chriscozi]

just a customer with unreasonable expectations.

 

[YourCastle]

saying that it is HIS since he paid for the materials

confusing.

Who PAID for the materials. If the contractor paid, then the end-user/buyer shouldn't be involved, nor get the rebate. If your friend directly paid for materials and the roofer supplied and only was paid for LABOR, then your friend gets the rebate.

So, who paid the supplier for the materials? That's the person who gets the rbate.

 

[gregbatch]

Unless it was a rebate targeted to the end consumer, he got exactly what he contracted for. End of story.

 

[YourCastle]

... "friend" ...

is this friend really you?

If not, I feel like there's a story behind the quotes

 

[pippip]

We're only hearing one side of story. Contractor may have quoted based on knowing he was getting rebate.

Without rebate they may have quoted the difference.

 

[MailGuru]

Look at it this way. The "friend" is going to buy ONE roof every 20 or so years. The Roofing contractor is going to buy materials for TWENTY to THIRTY roofs per year. Since the contractor is buying materials at a much higher volume than the "friend", it stands to reason he would be eligible for discounts that the "friend" can't qualify for. So, the "friend" is a little mis-guided in thinking that he is entitled to the discount.

 

[Macmann]

Thanks for all the replies. The contractor paid for the supplies, but in my friend's mind HE ultimately paid for the roof so HE alone should get the rebate. Full disclosure, the friend is my Father-in-law and he's stubborn as a mule. To make matters worse, the contractor is a friend of the family and my FIL is straining that relationship. I feel the same as you all have replied, that the contractor is due the rebate but there is no convincing the man.

 

[pippip]

Thanks for all the replies. The contractor paid for the supplies, but in my friend's mind HE ultimately paid for the roof so HE alone should get the rebate. Full disclosure, the friend is my Father-in-law and he's stubborn as a mule. To make matters worse, the contractor is a friend of the family and my FIL is straining that relationship. I feel the same as you all have replied, that the contractor is due the rebate but there is no convincing the man.

Who is the rebate from? Is it from the suppliers or some local government home improvement grant/rebate?

Wondering if things are getting confused with supplier trade discounts.

 

[namelessentity]

I think that's just savvy business. Contractor did 100% of the work, why should the client get the rebate? Unless the client is gonna go out and buy all the materials himself and do the research to find the right materials and find a deal that gives him a rebate I don't think he's entitled to the savings.

 

[PricelineNegotiator]

I think that's just savvy business. Contractor did 100% of the work, why should the client get the rebate? Unless the client is gonna go out and buy all the materials himself and do the research to find the right materials and find a deal that gives him a rebate I don't think he's entitled to the savings.

This.

 

[Macmann]

The rebate is from a local big-box retailer. My suspicions were correct-it doesn't appear anyone is siding with my FIL on this.
Soooooo do I show him this thread?

 

[pippip]

In that case, yes the builder was probably entitled to it if its from the retailer. If they weren't and it was the client's rebate then I doubt the supplier would have been able to avail of it anyway. Just explain it to the FIL that way.

 

[MailGuru]

I can see where he might be confused. In his mind, he is using the "New Automobile Purchase" model, in which advertised rebates go directly back to the customer instead of the dealer. In his mind, the "dealer" kept his rebate. Manufacturers sometimes use this method of marketing to entice the consumer to buy their product. In this case, the "consumer" is the "contractor". The manufacturer of the materials is using this method to entice contractors to buy material from them instead of a competitor. The end user (FIL) is not entitled to the rebate.

 

[MailGuru]

I will say this, in the interest of keeping peace in the family and friendships, since your "friend of the family contractor" made a little more profit than he had anticipated, would it be possible for him to meet with your FIL, put their heads together and possibly split the rebate 50/50? Or, has it already gotten to the point where it's not about the money, it's about who's right and who's wrong. I hate to see family and friendships torn apart because of seemingly insignificant conflicts.

Rule # 147: Never hire a friend or family to do a project............It's not going to end well.

 

[Macmann]

You are very wise indeed MailGuru