Spotlight on: How to Save Money with Bulk Purchasing
Nov. 4, 2014 — Even the best-financed condo and co-op boards can feel a strain on their budgets. With so many fixed costs, boards have few places where a budget can be cut. So why not try saving money through bulk purchasing? There are four areas where it's most feasible: electricity, insurance, cable television and physical items like appliances and windows.
For electricity, examine the method by which your cooperative or condominium is billed. Most co-ops are either master-metered or directly metered to an electricity provider. If directly metered, that means that the homeowner pays for his/her electricity directly to the provider.
In the master-meter situation, the building is actually purchasing the electricity used by residents, and is billed through a master-meter and pays the bill. Electric rates for this meter are discounted from a direct meter.
The Submeter Solution
Some co-op and condo boards with master-meters are attempting to implement submetering. This means that the building is still charged on its master-meter for electricity, but the cost is then billed back to the homeowners based on their usage. In addition, since the energy savings are significant, New York State has several programs to provide grants and loans to encourage submetering.
Another example of bulk purchasing involves homeowners' insurance. Many boards have discovered the tremendous benefits of homeowners' insurance and now require that homeowners maintain such protection at all times. To help facilitate this situation, some boards have actually negotiated with local insurance brokers in an attempt to get a discount on the premiums. In addition, the level of service will be better for the homeowners since they are now part of a group rather than a single account.
In terms of cable television, many co-op and condo owners enjoy substantial savings on their cable bills thanks to a bulk billing ("shared savings") agreement between the corporation and the local cable provider. These may last up to three years and usually provide for a deep discount off the cable bill (sometimes up to 33 percent) as long as a certain number of apartments sign up.
Note that the building may be responsible for paying the cable company directly and then charging the homeowners for usage. In addition, if the number of users goes below the stipulated amount, then the shareholders can lose the discount and will have to pay the current published rate.
Oh, Say, Can You A/C?
Finally, there are appliances and windows. One board is in the midst of a large exterior façade project. The board was extremely concerned that many of the shareholders' rusted, old and very heavy through-the-wall air conditioners could damage the new façade. The board contacted local air conditioner dealers and negotiated a tremendous discount for the shareholders on new air conditioners.
In addition, the board offered to have the new units installed for cost by the maintenance staff. The shareholders got new air conditioners inexpensively while the building preserved its new exterior. And everyone saved money on electricity since the new units were energy efficient.
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Adapted from "Does Buying in Bulk Save Money?" by Geoffrey Mazel (Habitat, February 2008)