Pricing and the Bid Day Blues
Spending too much for something is foolish; but spending too little is stupid. A famous guy uttered similar words in a much more elegant fashion when describing the common practice of trying to get a bargain - at any price. It causes me to wonder: In our world of auctions and reverse auctions, just how cheap is too cheap?
Within the HVAC business, perhaps the most notorious of offenders in the buy-it-cheap world is a common weekly event otherwise known as commercial bid day. In sales offices across the country, a territory manager (TM) or manufacturer’s rep has all the appropriate players’ numbers set for speed dial. Of course, the term player must be properly identified, lest you should think that everyone is of equal merit on bid day.
A player, a.k.a. a mechanical contractor, is often referred to as “my guy” in the world of TM-speak. In the normal course of business leading up to bid day, a contractor solicits bids from a variety of manufacturer sources. Theoretically, the lowest price, and the one most closely aligned with the specs, will be the winning bid, which the contractor uses in his/her bid to a general contractor.
So, you can see that unless you are a “my guy” contractor you may not really be a player. After all, you must have someone with whom to play. Right?
However, it is a pretty big sandbox out there, and if you are a really big player you may be shoveling with more than one TM on bid day. Now, understand that you might be called a whore by some because of a seeming lack of loyalty. On the other hand, you might prefer to think of yourself as being rather adept at multitasking.
Regardless of your approach to bidding plan-and-spec projects, one thing is often found to be true: He who wins, loses. Invariably, someone (contractor or manufacturer) is found to have either mistakenly or intentionally left something out of the bid, thus securing their fate as the low bidder. Yes, in a world of winners and losers, of highs and lows, of good news and bad news; only in the world of contracting can you experience the thrill of victory and the agony of defeat at exactly the same moment in time.
If you have ever witnessed a bid opening, the actual awarding of a project, an almost comical atmosphere exists. Friendly competitors in attendance are cajoling one another and laughing aloud as they accuse someone of leaving out a chiller or boiler in order to win the prize. A hush falls around the room as the winner is announced. Sometimes, the bid amount is also announced at the opening.
At that instant, heads begin to spin like Rosemary’s Baby, pallid faces stop breathing, and finally the winning contractor smiles like the Cheshire Cat in “Alice In Wonderland.” However, if you gaze deep into the cat’s wide eyes, you will see a scared rabbit. After the congratulations and handshakes are over, the winning rabbit rushes back to his office to double-check the numbers, wanting to reassure himself that he didn’t screw up the bid.
What a way to live.
Here is a person who understands the game, but doesn’t choose to play it on game day. Last minute mistakes are too costly.
Perhaps the real difference between bid day winners and losers are those who know when they are playing, and when they are being played.
Publication date: 09/03/2007
Within the HVAC business, perhaps the most notorious of offenders in the buy-it-cheap world is a common weekly event otherwise known as commercial bid day. In sales offices across the country, a territory manager (TM) or manufacturer’s rep has all the appropriate players’ numbers set for speed dial. Of course, the term player must be properly identified, lest you should think that everyone is of equal merit on bid day.
A player, a.k.a. a mechanical contractor, is often referred to as “my guy” in the world of TM-speak. In the normal course of business leading up to bid day, a contractor solicits bids from a variety of manufacturer sources. Theoretically, the lowest price, and the one most closely aligned with the specs, will be the winning bid, which the contractor uses in his/her bid to a general contractor.
LET THE GAMES BEGIN
At a precise and sometimes predetermined time, the cell phone dance begins. Every TM is calling “my guy” who provides information as to the lowest price currently on the street. This enables the savvy TM to drop his price a bit lower in order to win the job with “my guy.”So, you can see that unless you are a “my guy” contractor you may not really be a player. After all, you must have someone with whom to play. Right?
However, it is a pretty big sandbox out there, and if you are a really big player you may be shoveling with more than one TM on bid day. Now, understand that you might be called a whore by some because of a seeming lack of loyalty. On the other hand, you might prefer to think of yourself as being rather adept at multitasking.
Regardless of your approach to bidding plan-and-spec projects, one thing is often found to be true: He who wins, loses. Invariably, someone (contractor or manufacturer) is found to have either mistakenly or intentionally left something out of the bid, thus securing their fate as the low bidder. Yes, in a world of winners and losers, of highs and lows, of good news and bad news; only in the world of contracting can you experience the thrill of victory and the agony of defeat at exactly the same moment in time.
If you have ever witnessed a bid opening, the actual awarding of a project, an almost comical atmosphere exists. Friendly competitors in attendance are cajoling one another and laughing aloud as they accuse someone of leaving out a chiller or boiler in order to win the prize. A hush falls around the room as the winner is announced. Sometimes, the bid amount is also announced at the opening.
At that instant, heads begin to spin like Rosemary’s Baby, pallid faces stop breathing, and finally the winning contractor smiles like the Cheshire Cat in “Alice In Wonderland.” However, if you gaze deep into the cat’s wide eyes, you will see a scared rabbit. After the congratulations and handshakes are over, the winning rabbit rushes back to his office to double-check the numbers, wanting to reassure himself that he didn’t screw up the bid.
What a way to live.
A WINNING STRATEGY
In a recent conversation with a large mechanical contractor in Atlanta, he explained his strategy for bidding projects, though his company much prefers negotiated design-build. Competitive pricing is important. In fact, along with quality and reliability, it’s really the cost of entry - the price you must pay to play the game. In his words: “We do expect a vendor to be able to make a reasonable profit, but we do have minimum requirements as to how and when we are quoted. People who quote us at the last minute don’t win favor with us regardless of their price.”Here is a person who understands the game, but doesn’t choose to play it on game day. Last minute mistakes are too costly.
Perhaps the real difference between bid day winners and losers are those who know when they are playing, and when they are being played.
Publication date: 09/03/2007
