Dealers question equipment pricing

With the beginning of the year signalling the start of catering equipment manufacturers’ annual pricing announcements, some dealers have challenged the industry’s current pricing structure.

According to Marios Poumpouris, MD of Chiller Box: “Manufacturers are very quick to tell us that they are holding prices, but with commodity costs plummeting in recent years, why aren’t we actually seeing a drop in equipment prices?

“We have been in business ourselves for nearly 12 years now, and prices have continually inched up and up, even through the recessionary years.”

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Over at ScoMac, MD Iain Munro doesn’t believe prices will be slashed any time soon. “Whilst we have seen a drop in the price of fuel, stainless steel and borrowing money over recent years, I’m not sure we can expect to see equipment prices start to reduce.

“From our own experience, ScoMac have had to hold certain prices for key account clients that were agreed as far back as 2008 and based on far greater volumes than we currently turnover with them.”

Airedale Group’s MD, Mike Butt, surmised: “At Airedale we have seen a wide range of price increase request for 2016 up to 9%.

“Some European manufactures have been very honest in holding prices as a result of the weak Euro, whereas others have proposed increases with no justification.

“Price movement is a fact of life but manufacturers must ensure the end market will take the increases or face losing volume.”

Poumpouris described how Chiller Box has managed the increases over the years: “We as distributors have tried to generally pass these costs on, or in many cases, had to value engineer project specs down to meet a budget and maintain sensible margins. However, in our experience at least, we have now reached a glass ceiling.

“So when are we actually going to see the benefit of cheaper stainless steel, fuel and other relevant costs from manufacturers?”

While Munro believes: “The last 6 or 7 years of recession and recovery have lead to a very competitive period, particularly for the catering equipment distributor.

“On many occasions the distributor has had to cut their margins to secure an order, and then look at either putting pressure on the nominated specified supplier, or if the opportunity is available, look to swap specification to a comparable more competitive alternative to help them recover some of the lost margin.

“The net effect has been prices have been driven down and there is an expectation by the purchaser on what price he is now prepared to pay but only discovers the level of service he receives reflects the lower price after the event.”

Poumpouris agreed, saying: “Clients are not now prepared to pay more than they have been used to. The result is pressure on distributor margins. Couple this with distributors who are still happy to work on silly margins, means we all earn less than we are actually worth for the job we do, despite a very buoyant market.

“When are distributors going to start charging what we are really worth so we don’t have to compete harder for less?”

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