By Thad Plumley
Chances are you’ve never met my friend, but know her story. The friend is not a water well system professional, but the tale is one that has been around the groundwater industry for decades.
My friend’s company has a big-ticket contract with a client. The job must go out for bid every few years, which has never been a concern. My friend’s company does exemplary work.
There is real worry, though, a renewal won’t be coming this time. There is a new decision maker at the client, a bottom-line boss . . .
And a low bidder has entered the picture.
You’ve got to be kidding me, right?
It amazes me low bidding is still an issue today. There is so much information available about pricing jobs, not to mention tools that make doing so easier than ever.
Among the easiest to use is the National Ground Water Association’s cost calculators. You plug in your expenses and desired amount of profit into a spreadsheet and it calculates instantly your needed cost. It really is that easy.
Yet countless people continue to turn in bids undercutting the market price—just to snag a job. Simply put, no one should be charging less than exactly the price needed to cover their expenses and earn enough profit to be shared with all employees.
Unfortunately, you’ve probably been undercut a time or two in your career. I hope your philosophy was not to match the low bid with one even lower. Doing that is not only bad for business, but your entire industry.
Low bidders set the market. If you answer a low bid with another, you’re simply telling all the potential customers in your area what you feel your work is worth. When you answer their call someday, they’ll expect the same bargain-basement price you gave the first time. Low bidding is a race to the bottom and one where no one wins.
Hopefully you answered how the owner of my friend’s company did—by doing nothing.
When she asked the owner what he was going to do about the competitor’s low bid, he said, “Hold my head up high and be proud of our work.”
That is exactly how to address a low bid. You promote your skill and quality and point out such skills and qualities come with a price—the one you’ve established covers your expenses and provides you the profit needed for your business.
Doing so may lose you the occasional job just as my friend’s company may lose its bid. But quality work with a head held high still matters. It still wins the marketplace.
Thad Plumley is the editor of WWJ and director of information products at the National Ground Water Association. He can be reached at firstname.lastname@example.org and on Twitter @WaterWellJournl.