President Roosevelt was right, we really only have fear to fear. With markets getting severely competitive many firms are getting soft on the underside. They are allowing clients to walk all over them. People are refusing to educate their customers on the pitfalls of driving price so forcefully. Most customers think they’re generating the best financial opportunity for their own companies. In reality they are backing themselves into a dangerous corner. We have the responsibility to inform them of the negative consequences of taking an inferior bid or sub standard contractor. We worry that we’ll anger them or make them uncomfortable so we give in and perform pricing contortions to try and win the bid. Estimators are turning into mathematical acrobats as opposed to trained bidding experts.
I’ve sat through so many seminars that instruct you not to “negative” sell, but to sing your own praise and virtues as a supplier. Are you nuts!? You need to educate your customer on the failings, pricing schemes and cost cutting techniques used by inferior bidders. Just avoid speaking of the competitor by name. If you are not letting your customer know that the extremely low bid they received virtually guarantees an endless line of change orders, extras and inferior workmanship, you are missing the boat.
Let me put this very simply, when someone lowers a price unreasonably they MUST take their focus off the customer and put it on their own costs! This is fact! Ever hear the statement “you get what you pay for”? It’s true! You know your trade or industry. What corners do inferior or desperate competitors cut? Cheaper materials, untrained or unlicensed labor, safety compromising or even poor project management? What will this cost the customer overall? The sweetness of a low bid quickly disappears when the change orders start flying or a delay occurs on the project due to poor workmanship. This goes back to the old snake oil salesman days. Pulling the old “switcheroo”. Us sales guys have known this technique for decades. Contractors fall into the trap so easily because they’re not traditional sales people and don’t always know how to convey these truths. If you are allowing the customer to dictate what is a good value in your trade you’re not doing your job very well.
Being aggressive in this fashion takes some guts but usually gains respect. Your motive is having your client be properly informed. Then if they decide to go with what will probably be a nightmare of a low bid, it lies in their lap when the first change order comes that’s equal to the difference between the first and second bids. Project owners are learning everyday that a price that’s too good to be true is just that. It amazes me how some clients throw common sense out the window due to their insane focus on price, price, price. Really, is this an intelligent way to buy? Then why would you not convey the negative that could occur? If you get an inferior roof, it leaks. If you get inferior plumbing, it floods. If you get inferior electrical work, it could catch fire! Why risk this at all? I’d be incredibly suspicious in this economic climate of anyone having a ridiculously low bid. There are so many potential pitfalls. The company could go under during the project, they’re trying to make payroll or they’re hiring sub standard labor. Just pick one. Sanity must prevail. A good, fair bid with a complete scope and a desire for partnership style communication with a reputable supplier, should prevail. Unfortunately, some just don’t get it. Your job is to make sure they do. Do so tactfully but firmly. Don’t wimp out! You probably wouldn’t get the project anyway if you didn’t ask if they understood the risks of the sub standard bid. When you lower your price from your original bid, what was the first price? Let me tell you, a lie! Is that who they want to do business with? Someone who would lie about the bid price it would take to do the project. Doesn’t really evoke trust now does it? Build the value, educate the customer and be persistent in your approach. Don’t fear the client’s reaction. Be brave and steadfast in what you know is true. Soft selling is for a booming economy. Uuuuh, we don’t have one currently. So go for broke and sell the existing value of your company. Stop shaking your head and telling your customers you’ll sharpen your pencil next time. There may not be a “next time”!
