unethical business experience *LONG READ*

[BlackArcher101]

Originally Posted by chedder

Any chance you want to tell us how much the increase was? In my mind, if it's something like $1000 on a $14,000 tub, I'd personally suck it up knowing the world has been crazy and I really wanted the hot tub. If it's more than a 10% increase I'd have to think about it. You've probably saved more than that on not having higher electricity bills and chemicals for the last 18 months.

And what's the price of a new comparable model if you buy now? Is it the same, or do they appear to be eating some of it.

[Strange Brew]

Originally Posted by Sliver

Of course that's the aim.

But if we're talking about being ethical, I don't see it as ethical to knowingly allow somebody to lose money due to the current supply chain and shipping crisis just because a "deal is a deal." You can operate like that if you like, but I like to treat the people and businesses with whom I interact with more empathy and understanding. Your approach - to me - is a cold and uncaring one. I do care if you made a deal with me and now you're going to get fataed when I can prevent that from happening to you.

But, yeah, obviously you're in the right if you want to play the "you signed a contract" card. I rather play the, "let's see if we can make this fair to both of us" card.

I have to raise prices in my business often. I don't raise the price on past sales though. And longer term contracts have price escalation clauses.

This business made a sale and took the customers money.
This business then locks in price and delivery from their supplier. The deposit provided the business with the working capital needed to do this.
The supplier would have done the same with their suppliers.

I'm not suggesting the customer be heartless though. Every situation is a little different. But I'm not too happy when the price of bananas increases from when I put them in my cart and I go to check out.

When your customers come to you and say their economic circumstances have changed, would you reduce the price in this situation? Or would you say, it's a luxury item and I've decided you can afford it?

[Sliver]

Originally Posted by Strange Brew

I have to raise prices in my business often. I don't raise the price on past sales though. And longer term contracts have price escalation clauses.

This business made a sale and took the customers money.
This business then locks in price and delivery from their supplier. The deposit provided the business with the working capital needed to do this.
The supplier would have done the same with their suppliers.

Typically, yes, you can do things like that. Did you miss the part where there was an 18-month lead time, though? I'm sure there are a lot of parts in a hot tub. There is going to be a wood structure (wood has gone up big time in the last 18 months). There are going to be chips (LED lights, stereos, fountains, motors, timers, etc.)...have you bought anything with a chip lately (if you can even find them)? I don't even know what hot tubs are made out of...acrylic maybe? There's no way that hasn't gone up.

So yeah, we can sit here at our desks and just say, 'lock the price in, guy' but you can't honestly think that's the way the world works right now...particularly when obviously the hot tub company would be in a better position if they could collect payment in full and deliver the hot tub any time sooner than 18 months. Like, that's an insane lead time on a hot tub, but one that isn't a total shocker, either.

I believe the hot tub - ordered in November 2020 - could not possibly cost the same when delivered in April 2022. No hot tub company is going to be able to sue the chain of suppliers that would undoubtedly have increased their prices to the hot tub company. Locking in contracts is great and all, but at a certain size - which I assume most hot tub retailers would find themselves - enforcing a price contract in this day and age is impossible.

Originally Posted by Strange Brew

I'm not suggesting the customer be heartless though. Every situation is a little different. But I'm not too happy when the price of bananas increases from when I put them in my cart and I go to check out.

When your customers come to you and say their economic circumstances have changed, would you reduce the price in this situation? Or would you say, it's a luxury item and I've decided you can afford it?

If a customer wants to walk from a project because their circumstances have changed would I let them? Of fataing course because I'm a human being and don't like to make things harder for other human beings. I'll typically just keep a portion of their deposit to cover any of my costs and give them the rest. Sometimes I'll even do more. Like, I read in the paper about a customer of mine who died after he had given me a deposit on a project. I was out money, but the last thing I figured his estate needed was trying to figure out that charge or having to worry about getting a deposit back on something he was clearly never going to need again and I certainly wasn't going to throw the old "bUt We HaVe A cOnTrAcT" at him. I just came in on Monday, refunded his credit card in full, and didn't even contact his estate.

And you wouldn't be too happy if there was a pricing error on bananas? I wouldn't fataing care. I'd chalk it up to mistakes happen and I wouldn't give it another thought.

I mean, if somebody is actually trying to scam me obviously I'll get really annoyed. But if people are just cruising around doing their best and then let me know their circumstances have changed, regardless of which side of the arrangement I'm on I'll try to work with them and not just randomly dig in.

[Leondros]

Originally Posted by Sliver

Typically, yes, you can do things like that. Did you miss the part where there was an 18-month lead time, though? I'm sure there are a lot of parts in a hot tub. There is going to be a wood structure (wood has gone up big time in the last 18 months). There are going to be chips (LED lights, stereos, fountains, motors, timers, etc.)...have you bought anything with a chip lately (if you can even find them)? I don't even know what hot tubs are made out of...acrylic maybe? There's no way that hasn't gone up.

So yeah, we can sit here at our desks and just say, 'lock the price in, guy' but you can't honestly think that's the way the world works right now...particularly when obviously the hot tub company would be in a better position if they could collect payment in full and deliver the hot tub any time sooner than 18 months. Like, that's an insane lead time on a hot tub, but one that isn't a total shocker, either.

I believe the hot tub - ordered in November 2020 - could not possibly cost the same when delivered in April 2022. No hot tub company is going to be able to sue the chain of suppliers that would undoubtedly have increased their prices to the hot tub company. Locking in contracts is great and all, but at a certain size - which I assume most hot tub retailers would find themselves - enforcing a price contract in this day and age is impossible.



If a customer wants to walk from a project because their circumstances have changed would I let them? Of fataing course because I'm a human being and don't like to make things harder for other human beings. I'll typically just keep a portion of their deposit to cover any of my costs and give them the rest. Sometimes I'll even do more. Like, I read in the paper about a customer of mine who died after he had given me a deposit on a project. I was out money, but the last thing I figured his estate needed was trying to figure out that charge or having to worry about getting a deposit back on something he was clearly never going to need again and I certainly wasn't going to throw the old "bUt We HaVe A cOnTrAcT" at him. I just came in on Monday, refunded his credit card in full, and didn't even contact his estate.

And you wouldn't be too happy if there was a pricing error on bananas? I wouldn't fataing care. I'd chalk it up to mistakes happen and I wouldn't give it another thought.

I mean, if somebody is actually trying to scam me obviously I'll get really annoyed. But if people are just cruising around doing their best and then let me know their circumstances have changed, regardless of which side of the arrangement I'm on I'll try to work with them and not just randomly dig in.

Was that the lead time that was suggested though? We bought a couch in late 2020 and didn't receive it until a month ago. The retailer told us it would be there in May 2021 but ended up being in February 2022. We were fairly patient with them as they had a whole lot of reasons including manufacturing time, shipping container issues, domestic transportation issues, etc. Its one thing to be super delayed which is understandable but if on top of that they tried to increase the price on us I would have lost it.

At the end of the day businesses can't be blaming inflationary costs as a means to breach contracts. The onus is on them to manage their businesses as such. I think its only going to get worse and businesses are not going to be excused by not being able to manage their supply chain and contracts properly. The ones who do manage them properly will stay in business. The ones that don't will fail - as it should work.

[heep223]

It was not the lead time that was suggested at purchase. It went from around 6 months to 18 months, and obviously the dealer had no control over this.

I actually don’t have the price increase yet, they just said price is going up for us. I have no problem posting when I have it tho. Agreed upon price in 2020 was $16k.

My biggest concern is that they could probably sell this tub tomorrow for at least $20k. “Prices have gone up, but I can refund your deposit and no hard feelings”. Yeah of course no hard feelings buddy lol.

Knowing the nature of the dealer business model, and how they squeeze every penny from every single customer (IMO), it wouldn’t surprise me to have them act in this way.

I’ll find out more info but the more I think about it the more I feel they need to honour their price. With the exception of an increase in transportation cost which I would be willing to eat.

[GGG]

I think it’s a question of what was in the contract. I’d suspect there exists an escape clause in the contract that limits the liability of the dealer to just returning the deposit. I’d read the contract before you talk to them to understand your leverage.

If the hot tub market crashed the dealer would not be giving you your deposit back if you wanted to buy a hot tub at todays price. Ethically you are both bound by the contractual agreement you made. Expecting more or less than that for transactions between strangers just leads to problems.

If the price of a new hot tub had dropped to 12k would you try to get the hot tub for that price or be satisfied with the deal you previously stuck?

[RichieRich]

Depends on the type of business, what can or cannot be locked in, lead times, market conditions, etc... For example in the O&G markets we occasionally see the legal force majere implemented which effectively nullifies existing contracts. Seems many companies and their workers are ok with that but when it's personal it's harder to take. I get it. In these examples it feels like the end-user customer feels they're getting shafted, but don't consider that the local store/seller gets shafted more (like what Sliver is trying patiently to get us all to understand) to the extent that it could mean end of the business.

[GGG]

Originally Posted by RichieRich

Depends on the type of business, what can or cannot be locked in, lead times, market conditions, etc... For example in the O&G markets we occasionally see the legal force majere implemented which effectively nullifies existing contracts. Seems many companies and their workers are ok with that but when it's personal it's harder to take. I get it. In these examples it feels like the end-user customer feels they're getting shafted, but don't consider that the local store/seller gets shafted more (like what Sliver is trying patiently to get us all to understand) to the extent that it could mean end of the business.

Those force majere clauses are written into every contract with remedies and terms on how they are applied. They aren’t added on after the fact.

Also the disclosure of the cost increase or potential for cost increase should have been communicated and known well before the tub arrived.

[D as in David]

Surely the OP understood the risk they took by ordering a hot tub from Vader's World of Spas.

[rotten42]

Originally Posted by Wormius

Are you eating those costs or is the mark-up high enough to absorb them?

a little of both.

[Strange Brew]

Originally Posted by Sliver

Typically, yes, you can do things like that. Did you miss the part where there was an 18-month lead time, though? I'm sure there are a lot of parts in a hot tub. There is going to be a wood structure (wood has gone up big time in the last 18 months). There are going to be chips (LED lights, stereos, fountains, motors, timers, etc.)...have you bought anything with a chip lately (if you can even find them)? I don't even know what hot tubs are made out of...acrylic maybe? There's no way that hasn't gone up.

So yeah, we can sit here at our desks and just say, 'lock the price in, guy' but you can't honestly think that's the way the world works right now...particularly when obviously the hot tub company would be in a better position if they could collect payment in full and deliver the hot tub any time sooner than 18 months. Like, that's an insane lead time on a hot tub, but one that isn't a total shocker, either.

I believe the hot tub - ordered in November 2020 - could not possibly cost the same when delivered in April 2022. No hot tub company is going to be able to sue the chain of suppliers that would undoubtedly have increased their prices to the hot tub company. Locking in contracts is great and all, but at a certain size - which I assume most hot tub retailers would find themselves - enforcing a price contract in this day and age is impossible.



If a customer wants to walk from a project because their circumstances have changed would I let them? Of fataing course because I'm a human being and don't like to make things harder for other human beings. I'll typically just keep a portion of their deposit to cover any of my costs and give them the rest. Sometimes I'll even do more. Like, I read in the paper about a customer of mine who died after he had given me a deposit on a project. I was out money, but the last thing I figured his estate needed was trying to figure out that charge or having to worry about getting a deposit back on something he was clearly never going to need again and I certainly wasn't going to throw the old "bUt We HaVe A cOnTrAcT" at him. I just came in on Monday, refunded his credit card in full, and didn't even contact his estate.

And you wouldn't be too happy if there was a pricing error on bananas? I wouldn't fataing care. I'd chalk it up to mistakes happen and I wouldn't give it another thought.

I mean, if somebody is actually trying to scam me obviously I'll get really annoyed. But if people are just cruising around doing their best and then let me know their circumstances have changed, regardless of which side of the arrangement I'm on I'll try to work with them and not just randomly dig in.

Well we can up with scenarios until we are blue in the face. I have no idea why there is an 18 month lead time for a hot tub but that was pretty nice of the customer to allow the business to keep his money for that long until the hot tub market turned around.

I feel like you are focused on customers screwing over small business. Well I have no idea what business you are in but do you supply warranties to your customers? If your cost of providing service under that warranty goes up unexpectedly, are you no longer honoring it or asking for more money?

To me this isn't randomly digging in, it's respecting a relationship predicated on people keeping their word.

[GordonBlue]

Originally Posted by Strange Brew

Well we can up with scenarios until we are blue in the face. I have no idea why there is an 18 month lead time for a hot tub but that was pretty nice of the customer to allow the business to keep his money for that long until the hot tub market turned around.

I feel like you are focused on customers screwing over small business. Well I have no idea what business you are in but do you supply warranties to your customers? If your cost of providing service under that warranty goes up unexpectedly, are you no longer honoring it or asking for more money?

To me this isn't randomly digging in, it's respecting a relationship predicated on people keeping their word.

It's not like this is a business where the guy is a regular customer and have built up a relationship.
It's a just business transaction. There should have been a signed contract, so maybe they just have to keep their word to what was actually signed.

You think Sliver is focused on customers screwing over small business. That's a fair view for him to take, as I think many customers try hard to do so, often without valid reason.

The original poster has the attitude that he thinks the business is trying to screw him over. So he's also not respecting the relationship you're alluding should exist.

his words: "My biggest concern is that they could probably sell this tub tomorrow for at least $20k. “Prices have gone up, but I can refund your deposit and no hard feelings”. Yeah of course no hard feelings buddy lol.

Knowing the nature of the dealer business model, and how they squeeze every penny from every single customer (IMO), it wouldn’t surprise me to have them act in this way."

The supply chain is ####ed, and a business can't just keep swallowing the costs without passing some of that cost on, not if they want to stay in business.

[Sliver]

Originally Posted by Strange Brew

Well we can up with scenarios until we are blue in the face. I have no idea why there is an 18 month lead time for a hot tub but that was pretty nice of the customer to allow the business to keep his money for that long until the hot tub market turned around.

I feel like you are focused on customers screwing over small business. Well I have no idea what business you are in but do you supply warranties to your customers? If your cost of providing service under that warranty goes up unexpectedly, are you no longer honoring it or asking for more money?

To me this isn't randomly digging in, it's respecting a relationship predicated on people keeping their word.

I mean, if you don't understand this is the crux of the whole problem I'm not going to waste another minute discussing it with you.

The supply chain is currently fataed. The hot tub company wasn't setting out to take OP's deposit money and then roll around in it Scrooge McDuck style for 18 months. I'm sure they expected the sale to wrap in one or two months like it always has for the last 30 years. Instead, they couldn't get the product that they rely on to to sell in order to make money to put food on their table.

Events totally out of their control conspired against them (and OP) to prevent the conclusion of the sale for a year and a half. To add insult to injury, when the hot tub did arrive, their cost on it was higher than their expectation of the cost and their margin was negatively affected. This, after a year and a half of not being able to get the products they rely on to make a living. A small business needs to go into triage mode at that point. I mean, pissing off a few customers is a hell of a lot easier than laying off all your staff and closing your store because you couldn't figure out the result of selling at a loss.

In a situation like this, in my experience, a higher proportion of people will understand the circumstance and not suspect you of trying to cheat them.

But you have no idea why there's an 18 month lead time? Good grief. Have you been asleep for the last two years or something?

[nfotiu]

A quick Google search says that hot tub dealers typically strive for a 40-50% profit margin.

Taking the 40% margin, if they were selling for 16k, and now 20k, it is likely their cost went from $9600 to $12k.

If the market is scarce, and the dealer knows that they can sell it now for $20k easily, then I'm definitely siding with the OP here on the ethical side. Although, it does all comes down to what is actually in the contract and if the price is guaranteed.

There are plenty of examples of businesses taking advantage of scarcity caused by supply chain issues to maximize profits. PC video cards being one such example.

[Sliver]

Originally Posted by nfotiu

A quick Google search says that hot tub dealers typically strive for a 40-50% profit margin.

Taking the 40% margin, if they were selling for 16k, and now 20k, it is likely their cost went from $9600 to $12k.

If the market is scarce, and the dealer knows that they can sell it now for $20k easily, then I'm definitely siding with the OP here on the ethical side. Although, it does all comes down to what is actually in the contract and if the price is guaranteed.

There are plenty of examples of businesses taking advantage of scarcity caused by supply chain issues to maximize profits. PC video cards being one such example.

Sure, now imagine they have a fraction of their inventory they usually sell. Building lease cost hasn't changed. Sewer, gas, electrical bills haven't changed. I imagine they're still paying their phone bill, maintaining their website, paying an accountant at least annually. Somebody is being paid to do their books. Still paying property taxes. Still paying insurance. They've had to keep at least some staff around so they can ensure future sales. So even if their margin is 500%, if they have no product to sell - or not enough to keep the lights on and surely not enough to be taking losses - it's completely moot what their margin is in a perfect world based on your Google search that may or may not even apply to a typical Calgary business.

Like, dude, you're displaying a humorously basic understanding of small business finance that may have been relevant in any year prior to 2020 and applying it to a totally different environment and set of circumstances in 2022. The last business I'd want to be in right now is one where there's demand and no supply. And the supply that does trickle into your store arrives with a cost in excess of the cost you were expecting when you placed your order a year and a half prior.

If customers can't understand that, who needs enemies?

[Nufy]

If somehow there was a reduction in costs...would the buyer get a refund ?

[8 Ball]

Originally Posted by Nufy

If somehow there was a reduction in costs...would the buyer get a refund ?

Cost savings are passed down to customers all the time.

[nfotiu]

Originally Posted by 8 Ball

Cost savings are passed down to customers all the time.

From hot tub dealers who already locked in a price?

[nfotiu]

Originally Posted by Sliver

Sure, now imagine they have a fraction of their inventory they usually sell. Building lease cost hasn't changed. Sewer, gas, electrical bills haven't changed. I imagine they're still paying their phone bill, maintaining their website, paying an accountant at least annually. Somebody is being paid to do their books. Still paying property taxes. Still paying insurance. They've had to keep at least some staff around so they can ensure future sales. So even if their margin is 500%, if they have no product to sell - or not enough to keep the lights on and surely not enough to be taking losses - it's completely moot what their margin is in a perfect world based on your Google search that may or may not even apply to a typical Calgary business.

Like, dude, you're displaying a humorously basic understanding of small business finance that may have been relevant in any year prior to 2020 and applying it to a totally different environment and set of circumstances in 2022. The last business I'd want to be in right now is one where there's demand and no supply. And the supply that does trickle into your store arrives with a cost in excess of the cost you were expecting when you placed your order a year and a half prior.

If customers can't understand that, who needs enemies?

You described how you handled a similar situation by calling up the customer once you realized your costs had gone up and tried to work out something with him. That all sounds reasonable and above board.

The poster here describes the situation as the hot tub dealer didn't inform of this until the tub was here or on the way maybe, without a mention to him over the 18 months and just called him up with a take it or leave it offer on the increased price. If the customer thought he locked in a price on a fairly big ticket item, and that's how the contract reads, then this company sounds shady to me.

[8 Ball]

Originally Posted by nfotiu

From hot tub dealers who already locked in a price?

Sure, why not?