ICE STOREYou will usually find a large variety of products within any industry. These products will all have the same function, mostly the same packaging and claim to do the same thing. But there is something that always varies and is immediately obvious—the price tag.
Price is what typically separates high-quality products from their low-quality counterparts, at least in the consumers mind. The dealers and manufacturers may know the back-story and history of every product in their warehouse, but the customers certainly don’t. And with only price to go on, how can they guarantee they are:
- Not paying too much (for something that doesn’t seem worth it).
- Not paying enough (for something that isn’t worth the few dollars they saved in buying it).
And in the cable industry, this can be very tricky for consumers, because the importance of cable costs isn’t always on their mind…even if there’s a large chance of them being ripped off! The reason for this article today is to go behind the scenes and tell the price story to give you, the customer, the dirt on the industry. A small warning first: not all cables are created equal.
One of the biggest problems in the cable and wiring industry is simple: Everyone is trying to cut price. That’s a problem because it sends out a false message to the marketplace that prices should be less than what they really are. As the old saying goes: “If it seems too good to be true, it probably is”—and that is definitely the way of the cable industry. Unfortunately, there are no secrets or aces that manufacturers can magically pull out of their sleeve to make a high quality, dirt-cheap cable. It just doesn’t happen.
So, why do companies vary so much in price? What is the secret, and what is the story behind the price?
The answer is in the copper market.
If you were to take one of the most common and popular cables out there, Cat 5E, and cut it open, you would find that it is primarily made of copper—in fact, most cables are. So, there is an obvious dependency on copper by the manufacturers. For a long time the copper market was stable and costs stayed the same year after year. But the copper market suffered with the ups and downs of the economy, which caused massive and instantaneous price fluctuation in copper.
Unless you’re in the industry or have an interest in the copper market, you wouldn’t be aware of this. You wouldn’t be aware of the market instability, that the prices are continually changing in such a volatile manner. And most people aren’t aware that manufacturers don’t generally keep a large supply of product in house, usually just enough for a few weeks. Whenever they “stock up” they find their prices swinging wildly with the whims of the marketplace—and in one way or another, the marketplace is ruthless.
So now we have customers who are confused because the prices of cable are changing monthly, weekly, daily, with no end in sight. Different companies have paid very different prices and carry different sizes of inventory—so the company you got a great deal with before has dramatically increased their price and dealers have no idea why.
To make things worse, most vendors aren’t letting anyone know about it. Would it take too much time to send off an email saying “Hey, here’s what happened, copper just went up by 10 percent and you’re going to see a 10 percent increase from us”?
So, what does this mean for the customer? To put it simply, it means that at any given time, because of the constant and sudden fluctuations of the marketplace, customers have no way to know whether they are getting a good deal or not. They don’t have time to do all the research, watch the copper market, watch the prices fluctuate and know when to buy and when to wait, because to do that would take an exhaustive amount of time and energy. And since in the customer’s mind, “cable is just cable”, would it even be worth it to them just to save a few bucks?
The way that ICE Cable is distinct, and the reason customers know they will always get “below market pricing”, is that we do a vast amount of study and analysis of the market. It’s easy to turn to your buddy and say, “It seems like the price of copper is going up” and think that you are reading the market, but ICE Cable works off of the hard data, garnered from weeks of compiling document after document and putting out hard hitting analysis.
Here is a brief explanation of one of our spreadsheets on one of the most common cable, the Cat 5 enhanced. It lists out all of our costs, documenting each change in the marketplace, no matter how slight. We have what we’re selling the Cat 5e for, what our competitors are selling it for, and then the margin differences between those competitors.
Therefore, with all of those studies and hard facts, ICE can always confidently say “Relative to this company (let’s call it company x), on this SKU we’re 5 percent less. So, compared to Company X, if you’re working with ICE, we’re going to be on average 6 percent less than those guys”. In the context of many years worth of analysis we can say that historically, over the course of years, we consistently price out below the average in the marketplace.
This is what we mean when we say, “With ICE, you’re getting below market pricing. We know what the market is and have all the stats on major competitors”. Every SKU may not be less than every single competitor, but on average, that’s where you will end up: below the market. And if you do this type of analysis consistently, like ICE does, it frees up time and effort for the dealers who don’t want to do the in-depth research that is required to ensure the best possible price in an unstable copper market.
We can guarantee that our competitors aren’t doing the extent of homework that ICE does on the market. And even if they are, they’re not communicating it to their dealers, leaving them out in the cold, hoping to find a good price on wire and cable. One of the most common situations we see are dealers pulling out the price sheets from 5-6 months ago and, depending on how low prices were for cable at that time, thinking that they are still getting a great deal.
They don’t even realize that the market has fluctuated so much; often times they’re being charged 20% more for the same product without even knowing it! This happens because they are not watching the invoices that are coming through carefully enough.
ICE Cable notifies the dealer of price fluctuations, simply because we feel it’s the right thing to do and an honest way to handle our business. If a customer has a job coming up down the road that requires wire and cable, they are expecting the price listed at the time. If a couple of months pass before they’re ready to buy, they look at the prices, realize they may be paying 20% more and, understandably, get upset.
So, we take it upon ourselves as our personal duty to protect them and let them know of price fluctuation and changes as they come.
There is a crucial difference between the manufacturer of a product and a manufacturer that really understands the business they are in. And with ICE you know we are protecting our dealers and customers as we research, study and plan based on how the market ebbs and flows. With that knowledge, we get a general understanding of the patterns, details and nuances that most people just aren’t aware of and armed with that knowledge, we can provide extremely accurate depictions of what’s happening in the market and can advise dealers especially in the way of inventory, when to stock up, when to wait it out, etc. This permanently eliminates a dealers need to micro manage the market. That information and a “we’ll take care of you” mentality is recognized and we find ourselves becoming a long-time and trusted vendor.
And that, in essence, is the price story.
