Two Landlords Walk into a Plumbing Merchant
The first spends half an hour utilising the latest sales, psychological, and interrogation techniques to get the branch manager down to the best possible price.
The second then gets to the till. “I’m with LNPG” he says and flashes his membership card. And like magic, the price comes down well below what the first landlord could have imagined.
But it’s not magic – it’s the power of contract pricing.
The Power of Contract Pricing
Over the last ten years, LNPG members have spent in excess of 130 million pounds with national UK suppliers. It's been with this joint effort that LNPG are able to negotiate fantastic contract pricing with our partners for the membership.
Contract pricing has historically always been a closed shop. And there are some conditions to our use of it – which is why you’ll need to sign up with us (or join one of our non-member webinars) before we can share any prices.
Still, contract pricing is relatively straightforward once you consider the three pricing structures available in this country:
When you walk into a retail outlet (like a DIY store) you pay the top price.
Even if you are offered discounts, it remains by far the most expensive way to buy anything.
To make things worse, many products offered by retailers are of a lower quality than trade products. In fact, some products are manufactured exclusively for retailers, using lower quality parts to reduce cost and allow the retailer to compete on price.
These items are more prone to failure, may be harder to source parts for should they fail, and generally speaking, are not fit for the demands of the rental market.
Trade pricing is popular in the building materials market and tends to be much more competitive than retail pricing. As tradespeople are likely to buy the same products regularly, and may often buy in bulk, they are able to get better rates.
Product quality is usually a lot better for the trade as well. The last thing a tradesperson wants is to head back to a job to fix something they've fitted, so it pays to know the difference between the good, the bad, and the ugly.
So, all in all, trade pricing is pretty good, but even the best negotiators among the trade can't compete with contract pricing.
When central government, major housing associations, and national housebuilders need to upgrade their housing stock, they use contract pricing.
This means skipping the distributor and going straight to the source: negotiating the best prices possible directly with manufacturers. As you might imagine, this also leads to a lot of private meetings and terms agreed over periods of many years, to keep the little guys out.
Like we said, it’s not magic. It’s not even new; this has been happening for decades. It's just that things went a lot smoother without the rest of us knowing about it.
That's why in January 2011, LNPG came along and unlocked contract pricing for private landlords too.
Today, LNPG represents more than 5,731 landlords and over 30,000 properties nationally.
With the ability to give private landlords a voice across the industry, we've managed to negotiate preferential contract pricing on everything from plumbing, heating, and kitchens to paints, flooring, and even insurance.
As a member of LNPG, when you buy a product from our partners the price you pay is the result of the negotiation between LNPG and the manufacturer – and because your purchase represents a small fraction of the £20 million our members spend every year, you don't need to buy any more than you need to leverage LNPG's bulk buying power.