Knowledge Base
Contract Pricing
Contract pricing is a negotiated agreement that fixes the prices a supplier will charge a buyer for specified items over a set period, replacing list prices with committed rates.
How contract pricing works in multifamily
Operators negotiate contract pricing with MRO distributors, appliance suppliers, flooring and paint vendors, and service providers. The structure varies: fixed prices on a core list of SKUs, a percentage discount off the supplier's list prices, or tiered rates tied to volume commitments. In exchange, the supplier gets predictable volume. Contract pricing is how a portfolio converts its size into lower unit costs — and on paper it ends the pricing question, because the price is "already negotiated." In practice, that is where the pricing question starts.
Why contract prices drift
Contracts age in quiet ways. Discounts pegged to list prices inflate as list prices climb. Items get discontinued and substituted at new rates. Purchases of items not on the contract ride through at full price on the same invoice. And rates that were competitive at signing can be beaten by the open market two years later. None of this is visible from the invoice total — it shows up only when actual lines are checked against the contracted rates and against the market. A periodic line-level invoice audit is how drift gets caught.
How to keep a contract honest
Treat the contract as a hypothesis to re-test, not a problem solved. Each quarter, pull the invoices from contracted suppliers and answer two questions: were we billed the rates we negotiated, and are those rates still better than what other verified suppliers charge for the same items? The first catches billing errors; the second catches market drift. The Benchmark runs both checks as part of pricing every R&M line a property paid, which turns contract renewal from a relationship conversation into a numbers conversation. For the wider expense stack, see reducing multifamily operating expenses.
Related terms
Start with one property and one quarter
Send us a quarter of invoices and we will show you what it should have cost. If there is nothing there, we will tell you that too.
