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  1. #1
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    When does a contractor become a distributor?

    Scenario - Contractor sells ASC controllers to customer without installation or additional warranty.

    Should there be any complaint from the contractor to the manufacturer if an actual distributor sells to this customer if the customer starts shopping?

  2. #2
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    Tricky situation. But the answer is; it depends.

    If the contractor is signed on as "just" a contractor and decides to start selling parts under that umbrella, he's on his own. At that point he's probably in breech of his agreement with the manf. The manf. is likely to look the other way as long as that business is not hurting another contractor/distributor or resulting in tech support calls form the end user.

    But if the end customer has issues with the contractor and if the manf. decides the end user is going to mean more revenue for them, they'll step in and support the end user directly.

    If the manf. is simply doing an end-run on his contractor, then that manf. is not one I'd want to deal with. But in this situation it's unlikely the contractor has a "legal" complaint as his agreement with the manf. is as a contractor, not as a distributor.

    Nikko

  3. #3
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    I think you have three parties here:
    Contractor
    Manufacturer
    Distributor

    If the contractor is setup directly with the manufacturer and decides to pass controllers distributor-style than he shouldn't have a gripe with a distributor or the manufacturer is my thought.

    You stated: "If the contractor is signed on as "just" a contractor and decides to start selling parts under that umbrella, he's on his own. At that point he's probably in breech of his agreement with the manf." I can't remember a contract I signed or read where the manufacturer failed to say that engaging in distribution by a contractor was a no-no.

    It's interesting you really see this with LON based controllers but it's not really happening with the bacnet world.

  4. #4
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    At the resi level, Honeywell had things like VisionPro stats and humidifiers in H/D for a while. For the most part, they pulled them.

    A few weeks ago we had a dog and pony show here put on by Honeywell to promote their new resi product line. One of the sales reps asked me if there was anything else... I said that I do NOT want to see these products in a big-box store, as the HO needs to buy these products from us... NOT a big box store.

    A couple of other contractors chimed in there. The consensus was that if Honeywell does put the new products in H/D, we will go to a different manufacturer.

    I personally think there should be a defined line here, just my opinion.
    GA-HVAC-Tech

    Quality work at a fair price with excellent customer service!

    Romans Ch's 5-6-7-8

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  5. #5
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    I think it's fine they buy them from you if you install them and warranty your work. I think when you simply pass them through that's a different issue.

  6. #6
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    Quote Originally Posted by sysint View Post
    Scenario - Contractor sells ASC controllers to customer without installation or additional warranty.

    Should there be any complaint from the contractor to the manufacturer if an actual distributor sells to this customer if the customer starts shopping?
    From a service focused / design-build company perspective:

    No, the customer interest should aways be first.
    If the contractor moves enough product in their normal endevours, the contractor's multiplier should allow them to make up some of the pricing difference.

    Customers / owners should buy as they see fit. If it's strictly low dollar, and you're not it, OK.
    I find very few that way, and when it happens, it doesn't bother me a bit. Most will ask me to get the material because the time that would be spent on the task is more valuable than a buck or two per piece savings that they might eventually find.

    I think when you simply pass them through that's a different issue.
    Why and what.

  7. #7
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    I might be referring to a case where the contractor was charging more than double the distributor for passing parts. In which case, since there is no value added the customer (IMO) can seek out a better price and I don't see where the contractor has a gripe about it.

    So, when I say: "I think when you simply pass them through that's a different issue. ", I was more pointed in directing to GAHVACtech by saying if you want a H-well to limit a line of product then you have to support that line. Otherwise you would be no different than a H/D and why shouldn't H-well be allowed to see who does better? It is the same principle. However, when you are provide a service with the parts, that's a different issue.

    I think that's why most (if not all) manufacturers have the non-distributor, non-retail clauses in the contracts to contractors.

  8. #8
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    I've always liked the idea of the customer being able to go back to the manufacturer and pay "retail" price, but no less. As a contractor your rate should be so much less than retail the only reason the customer should not go through you is if your stupid and try to charge more than retail or if the customer really hates the local contractor. I think a contractor becomes a distributor when he tries to sell outside of his/her general 'area' and sells to customers in that other area at a rate less than retail.

    But again if you are just passing parts; however the other danger passing parts is getting them to unqualified hands and then getting a bad name for the manufacturer due to improper installation/programming.
    Last edited by crab master; 09-24-2008 at 07:01 PM.
    "How it can be considered "Open" is beyond me. Calling it "voyeur-ed" would be more accurate." pka LeroyMac, SkyIsBlue, fka Freddy-B, Mongo, IndyBlue
    BIG Government = More Dependents
    "Any 'standard' would be great if it didn't get bastardised by corporate self interest." MatrixTransform
    http://threedevilskennel.com/ - not my website.
    Versatile Hunting Dog Federation - www.vhdf.org/


  9. #9
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    Quote Originally Posted by sysint View Post
    I might be referring to a case where the contractor was charging more than double the distributor for passing parts. In which case, since there is no value added the customer (IMO) can seek out a better price and I don't see where the contractor has a gripe about it.
    Agreed.
    They've got the hook'em, screw'em, and how business philosophy down, now all they need is the BACcrap line that will support that.

  10. #10
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    Quote Originally Posted by crab master View Post
    I've always liked the idea of the customer being able to go back to the manufacturer and pay "retail" price, but no less. As a contractor your rate should be so much less than retail the only reason the customer should not go through you is if your stupid and try to charge more than retail or if the customer really hates the local contractor. I think a contractor becomes a distributor when he tries to sell outside of his/her general 'area' and sells to customers in that other area at a rate less than retail.
    I disagree. Full retail? That sounds like list price. And that sounds like BACcrap.

    If a owner can buy, and should be able to, at a .50 multiplier directly from a distributor, I know that would be the price I'd have to match when just moving product. With my lower multiplier, say .35, I could up charge the difference and still match the .50 sell price.

    The beauty is that it's self-feeding too. The more product I move the better the multiplier gets, which serves me better if and when one of those crunch situations arise.

  11. #11
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    He asked about a distributor. In my mind a distributor provides no/minimal support to an end customer, just passes parts/goods.

    Now we have a company like Engenuity, but they do provide support so I don't have a problem with that. Like I said, the danger comes in with either unqualified installations/programming, or the argument could be made controllers that are too hard to program if the average HVAC guy can't set it up and install it.
    "How it can be considered "Open" is beyond me. Calling it "voyeur-ed" would be more accurate." pka LeroyMac, SkyIsBlue, fka Freddy-B, Mongo, IndyBlue
    BIG Government = More Dependents
    "Any 'standard' would be great if it didn't get bastardised by corporate self interest." MatrixTransform
    http://threedevilskennel.com/ - not my website.
    Versatile Hunting Dog Federation - www.vhdf.org/


  12. #12
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    Quote Originally Posted by crab master View Post
    He asked about a distributor. In my mind a distributor provides no/minimal support to an end customer, just passes parts/goods.
    So who would they can on to help them? Probably you. I still don't see an issue.

    Like I said, the danger comes in with either unqualified installations/programming, or the argument could be made controllers that are too hard to program if the average HVAC guy can't set it up and install it.
    Sorry, no offense meant, but those sound like standard lies #8 and #13 from the BACcrap sales training manual.

    We, as control systems technician/engineers, should never impede an owner's desire to self-execute work. Again, if the owner struggles, who will they call on? Probably you. I still don't see the issue.

  13. #13
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    Maybe I should start selling Bacnet!

    I do agree with you from one aspect, but I am just stating what I've seen. Unqualified installations give a product line a bad name plain and simple, so the manufacturer has to have some kind of protection in place. I agree let stuff start going free market and let the best prevail, but I think those that start down that path may be eaten alive in the beginning until more start to follow, unless they make their controllers/software some of the easiest on earth to program and operate. There goes my programming job.

    I guess the other item a contractor could do is charge a higher rate to a "non contract" customer. Anyway I am not a business owner but I know a lot of my "free" sales time is purchased through the markup rate on the materials purchased. Anyway no offense taken and I am not trying to get into a pi**ing match.
    "How it can be considered "Open" is beyond me. Calling it "voyeur-ed" would be more accurate." pka LeroyMac, SkyIsBlue, fka Freddy-B, Mongo, IndyBlue
    BIG Government = More Dependents
    "Any 'standard' would be great if it didn't get bastardised by corporate self interest." MatrixTransform
    http://threedevilskennel.com/ - not my website.
    Versatile Hunting Dog Federation - www.vhdf.org/


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