Full Version: Do Not Bid!
From: Engravin' Dave (DATAKES) [#1]
23 Sep 2005
To: ALL
Below is a link to a short web seminar for the promotional product industry, but I think it also applies to our industry as well. Enjoy!
http://www.distributorcentral.com/resources/education/BusinessMgmt/Never_Bid_On_Orders.htm
From: Cody (BOBTNAILER) [#2]
23 Sep 2005
To: Engravin' Dave (DATAKES) [#1] 23 Sep 2005
I think this holds great relevance for our industry.
This past spring, we were asked to bid on some trophies (about 200 of them) for our local youth soccer association. I told the lady requesting the bid the following points:
1) We are NOT the lowest priced supplier in our town. If she wants the absolute cheapest product, she could simply go to "X" company...they have lowest price on the lowest quality products. Note that "X" often comes to me for laser engraving (usually on 5 to 10 plaque plates, and they always do the layouts before they bring them to me).
2) Since we aren't a "trophy shop", all the trophies that we DO make are by hand, one at a time. Every order is a "custom" order...we don't stock any trophy components.
She gave me a rough specification for the trophies that she wanted. After she got all the bids she wanted, we ended up being about $2 high per unit. She asked me if we would consider reducing our price so that we could get the order (she liked the quality she saw in our shop...but we were just too "pricey" for her).
I told her that we could not. If we had, I would have been doing them for practically no profit (can't afford to do that).
Needless to say, I didn't get the order. That's okay with me...we don't need the work THAT bad.
In my other job, I sell elevators. Virtually every elevator that I sell is through a bidding process (common in the construction industry). However, some of the same logic holds true for that industry: You aren't always looking at an apples-to-apples comparison if you only consider price. As a result, my customer (I only sell to one particular company) sometimes doesn't get exactly what they expect from certain of my competitors.
There have been a few times when my customer has come back and asked me to reduce my price to that of my competition. If it's a couple of percentage points, I tend to consider it (I don't want to lose a $500,000 job over a couple thousand dollars). However, I often find that my competition isn't quoting exactly the same equipment that I am...and that their PRICE is much lower than my COST. When I see that (as I recently have), I stand firm on my price....just won't budge.
Although we're sometimes tempted to "bid" on jobs in my own company, we TRY to take the same stance: I know what my costs are, and I know what I need to make on each one. To work for any less means giving away my services.
There's nothing wrong with a potential customer comparing prices and products...we all do it all the time. But if we're going to stay in business (and I plan to), we have to stick to our guns!
Cody
From: John (JOHNRMONTG) [#3]
24 Sep 2005
To: Engravin' Dave (DATAKES) [#1] 24 Sep 2005
From: Stunt Engraver (DGL) [#4]
24 Sep 2005
To: John (JOHNRMONTG) [#3] 25 Sep 2005
John,
I enjoyed the pep talk as well. The one intangible is "confidence."
When faced with the prospect of losing a job, due to a higher quote than others, the most difficult thing to do, can be sticking to your quote.
Sadly, when the going gets tough, some people will lower their price, before considering that price isn't the only component to a sale.
EDITED: 24 Sep 2005 by DGL
From: Michael [#5]
31 Oct 2005
To: Engravin' Dave (DATAKES) [#1] 31 Oct 2005
An interesting presentation. Some great scare tactics. A couple of valid points.
Kind of reminded me of a conversation I had with a hobby shop owner about 10 years ago. Boy, did he believe in the "American Way"! Loved to point to his successful store (which, when he purchased it, had an outstanding reputation in the modell RR industry) as an example of "how to do it".
His biggest and most frequently voiced complaint was about his competition. Not the other hobby stores, but the guy who created a unique model in his basement and sold it via mail order from ads in the same magazines in which he advertised. According to him, this was unfair and (yes, he said this many times) should be outlawed. A business should be required to be in a brick and mortor store front. The guy working in his basement should be required to sell only to those who have a "real" store.
That Model RR hobby shop is now owned by someone else and is a cut-rate print shop where you can buy the lowest priced photocopies, banners, pop signage, etc, in the area. The "new" store is thriving because the margin is very (ridiculously?) low so his prices are ridiculously low. High volume at low margin.
Hmmmmmmmm?
Disclaimer:
These are observations, not neccesarily my opinions. I don't play a dentist on TV or a mechanic on Radio. I input garbage by the shovelful (and the garbage guy carts it off by the truckload)