Quoting apples to oranges

[JeffKiper]

I know several of you guys work for yourself. So I want to ask. How do you handle loosing quotes when you know you where not quoting the same systems?

I quotes a safety system with everything to the customer spec. I was $22K they had another guy quote the "SAME" job at $9K. My first reaction was I will start farming out work to him. If he can do the job for $5K less than I can buy hardware for then he is getting a great deal and I would like to start using him to do my systems.

I had valves, meters, PLC, HMI, etc.etc...

I started charging for quotes once I have over $100K out in quotes to a company. I think they got the hint that I am not going to be used as a second quote for free.

So what do you guys do?

 

[leitmotif]

Uhh Jeff based on numbers you provided he was 13K less than you.

Was told City of Seattle threw out absurdly low bids.

I also understand many contractors charge for estimates / bids (one and the same in many cases).

Dan Bentler

 

[bernie_carlton]

He was saying that $9K was $5K less than his own hardware costs, not his total bid.

 

[leitmotif]

He was saying that $9K was $5K less than his own hardware costs, not his total bid.

Read it for third time - got it right this time.

I think I would be tempted to withdraw and let the other guy have the job. Especially if I could be the mouse in the corner and watch the fun.

Dan Bentler

 

[Tom Jenkins]

There are seveeral scenarios in your post:

1) Low-ball bids: Most of my work was bid against a consultant's plans and specs, but even so I'd see guys quote below my material cost. I'd simply call the contractor or customer, indicate they should compare my detailed scope of supply against the low-ball bidder, and let them know I'd be around if they had questions. I made a point of never bad mouthing the low baller, even if I knew they were crooks - there's no future in that. Usually the low bid would be accepted, the job would be hell for all parties concerned, and by the time I was laughing over the horror stories I'd also be working a job I could make money on. That's life - don't obsess over it.

2) Bid shopping: Some contractors would tell you rediculous prices just to get you to drop your pants. I'd usually tell them I had a couple thousand dollars, but not near what they wanted me to cut. I'd tell them to look at my scope, my reputation, and decide how much it was worth for them to get off the jobsite on time and with everything working. I'd get some of these, I'd loose some of these, but I'd never sweat them. I always had enough work to buy groceries anyway.

3) Keeping the competition honest: If I decided I was wasting my time because someone was already in bed with the prospect and I was being used to beat them up a little, I'd note it. The next time those folks called I'd explain that I wasn't competitive in whaterver they were looking for and decline to bid. I was never in an industry where getting paid to do a proposal was even a remote possibility, but my guess is you can't get enough to make it worthwhile. If you think you're being had, just tell them thanks but no thanks instead.

4) Really cheap customers: If someone is dumb enough and cheap enough to take a price that is truly rediculous, you can't help them. You probably don't want to work for them anyway. Those customers are always squeezing you and hastling you. Move on.

5) You are no longer competitive: Sometimes industries change, sometimes a competitor has a better idea or a better way of doing it. If you are frequently the high guy and not in the hunt, you need to sereiously look at your systems and your rates and your work method. Quite a few years ago I saw this happen to me. I changed my base platform, invested some time and money in having my guys create some canned subroutines, lowered my profit expectations, and grew my business as a result.

No easy answers - hope this helps.

 

[JeffKiper]

This morning I was told that I did not get to bid so I plan on watching from a far distance.

I was handed his quote. I designed a safety system that will comply with ANSI. My competition system will NOT comply. No big deal for me I almost brought that up that we where not quoting the same functionality. I will let them make the call. Last time I voiced the my concerns my competition was handed the solutions and the job. I will let them build the systems after the customer signs off in them I will try to get the changes.

 

[sparky66]

Many years ago, when I was still in college, I did landscaping work. Some guy(a doctor) wanted me to give him a quote on building a stone retaining wall. A fairly big project. He wanted a rendering of what it would look like, so I had an artist paint it up with his house and the retaining wall. I told him I would have to charge for the rendering, and he said no problem. I sent him the quote for the total job, which spec'd the type of stone and a basic description. He came back and asked for a detailed quote: How many of each kind of stone, yards of gravel, yards of dirt, etc. I complied, though most people are only concerned about the bottom line. I didn't hear from him again(including not getting payment for the rendering). 1 year later, my friend, who mows his lawn, says the doctor is looking for some grunt work help to help build the retaining wall. I then realized he had me engineer his project for free. I am now always wary of giving away too much information when quoting.

 

[jdbrandt]

This morning I was told that I did not get to bid so I plan on watching from a far distance.

I was handed his quote. I designed a safety system that will comply with ANSI. My competition system will NOT comply. No big deal for me I almost brought that up that we where not quoting the same functionality. I will let them make the call. Last time I voiced the my concerns my competition was handed the solutions and the job. I will let them build the systems after the customer signs off in them I will try to get the changes.

None of this brain-bashing really matters, now, does it?
If you don't win the bid, you never get to show that you were in compliance.
If you have a client who is only interested in initial cost (bid amount), and who is dealing with your competition for "the first time", we all know how that will end.
But, whether the low-baller crashes and burns, or not, at the end of the day, you didn't get the work.
Sometimes, like Tom said, you need to move on.
And don't forget them, so you know when to not answer the phone, when they start shopping for someone to come in and fix up the messes the other guy made.

 

[JeffKiper]

Jeff, You and Tom are correct I am moving on and letting it go. I just wondered how you guys handle these things.
I am going to quote one tonight that will be about 120~160 man hours. So this would more than make up for that job plus it is a new customer.
I have 1 custom that said they want every hour they can get in 2013. The next 2 ~3 years look like they might be good.

 

[jdbrandt]

Jeff, You and Tom are correct I am moving on and letting it go. I just wondered how you guys handle these things.
I am going to quote one tonight that will be about 120~160 man hours. So this would more than make up for that job plus it is a new customer.
I have 1 custom that said they want every hour they can get in 2013. The next 2 ~3 years look like they might be good.

"sometimes, the best job you ever got, was the one that you didn't get"
PLC ZenMaster.

 

[jdbrandt]

There are seveeral scenarios in your post:

1) Low-ball bids: Most of my work was bid against a consultant's plans and specs, but even so I'd see guys quote below my material cost. I'd simply call the contractor or customer, indicate they should compare my detailed scope of supply against the low-ball bidder, and let them know I'd be around if they had questions. I made a point of never bad mouthing the low baller, even if I knew they were crooks - there's no future in that. Usually the low bid would be accepted, the job would be hell for all parties concerned, and by the time I was laughing over the horror stories I'd also be working a job I could make money on. That's life - don't obsess over it.

2) Bid shopping: Some contractors would tell you rediculous prices just to get you to drop your pants. I'd usually tell them I had a couple thousand dollars, but not near what they wanted me to cut. I'd tell them to look at my scope, my reputation, and decide how much it was worth for them to get off the jobsite on time and with everything working. I'd get some of these, I'd loose some of these, but I'd never sweat them. I always had enough work to buy groceries anyway.

3) Keeping the competition honest: If I decided I was wasting my time because someone was already in bed with the prospect and I was being used to beat them up a little, I'd note it. The next time those folks called I'd explain that I wasn't competitive in whaterver they were looking for and decline to bid. I was never in an industry where getting paid to do a proposal was even a remote possibility, but my guess is you can't get enough to make it worthwhile. If you think you're being had, just tell them thanks but no thanks instead.

4) Really cheap customers: If someone is dumb enough and cheap enough to take a price that is truly rediculous, you can't help them. You probably don't want to work for them anyway. Those customers are always squeezing you and hastling you. Move on.

5) You are no longer competitive: Sometimes industries change, sometimes a competitor has a better idea or a better way of doing it. If you are frequently the high guy and not in the hunt, you need to sereiously look at your systems and your rates and your work method. Quite a few years ago I saw this happen to me. I changed my base platform, invested some time and money in having my guys create some canned subroutines, lowered my profit expectations, and grew my business as a result.

No easy answers - hope this helps.

I just cringe when someone says: "Here's a quote from your competitor...could you look at it, and tell me what he left out, that you put in?" My standard answer to this is: "I can see that you are concerned that this cheap guy isn't giving you a comprehensive quote. So, maybe you're asking the wrong guy, the wrong question. And, if you don't think that, perhaps you'll find out what he left out, as soon as you award him the contract."

 

[JeffKiper]

I don't mind loosing a job to someone when we are quoting the same things.

I don't even mind my competition seeing my quotes.
I learned by being burnt more than once I don't do BOM without PO. If they want a parts breakdown I would be happy to do the design for a fee.
I have a job going on now where the electricians gave a $150k PO back to the customer because he knew it was going to go south. I learned this after getting in the jobsite.

 

[sparky66]

I worked for a distributor that was bidding on a job. The competitor(A-B) kept on dropping their drawers and throwing in extras. My boss finally matched them, even though he had a bad feeling about it. The customer ended up going bankrupt, and it put a big hurt on our small company. Sometimes you should turn down those jobs, even if there is a carrot hanging out there.

 

[DickDV]

And so, it seems to me that two principles become apparent. First, learn something from every job you quote, especially those you loose. Second, there are always some jobs that your competition deserves. Leave those for them. You only want the profitable, honorable jobs. Let the rest go.

Of course, there are some markets where there are essentially no profitable, honorable jobs. Then the really painful decision has to be made to change markets. That's really tough and a lot of innocents (like family) can get hurt in the process. Business can be awfully cruel.

 

[JeffKiper]

I don't sharpen my pencil and see what I can thin down on. I did that a few times and one of the times I was lucky enough to pay to work for them. I needed work but I needed paying work. I can set at home and not loose money.
Now every time I am asked to requote something I always come back $100 or more higher. If the scope changes significantly of course I re-quote it correctly. If they just want me to see what I can cut down on I usually find a something in the quote that I missed so the price goes up.