Being Competitive

B&C

Im sure Im gonna catch it from both sides but here goes. I was under bid on a small commercial job this week I was the high bidder by almost 1800.
I have never been the high bidder before usually im low or in the middle I didnt make any changes to the way I bid things. My wife is my office partner and talked me into adjusting the bid, I was ok with what I came up with and faxed it in. About an hour later I started feeling bad about cutting the bid because I used Cheaper lights and cut my labor time. Still gave plenty of time just not my normal cushion. My final bid on job was 6200 next bid down was 6000 how can guys do this my material costs where 3900

silvertree

There is always someone faster, cheaper more desperate ect, forget about it if you can.

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Kitchen, bath, St Paul remodeling
Minneapolis Remodel Blog
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Bubbles

yeah. Just keep puttin out bids. That's the key. You only want 1/2 that you put out. Don't be known for "The Cheap Guy". Sometimes I tell the customer to make sure the bids are apples to apples and all the other things that us experienced electrician's offer vs Handyman types. That could be the turning point that could make them choose you. Don't just fax over a bid and be done with it. Stress all the things that could happen with inexperienced cheap bids. Stay at your price and see what happens. Don't come down. That will make you look desperate (even if you are).

Good luck

Bubbles

Oh. Here is why it's tough in indiana as well....

"INDIANA
Only plumbing contractors need to be licensed in Indiana. Public Works and Department of Transportation work must be done by certified or pre-qualified contractors. Before beginning work, you should check for license requirements at the local level."

maceycon

I've been running into the same thing here in MA. I'm getting beat by huge %. You try to sell on quality and references. Referrals from PC are never a problem, but new clients. Last week I cut my labor rate and mark-up. Just trying build the schedule up. I lost out on a Kitchen, a bath and a basement remod last week. all the people said they would like to have me do the work, but I was too high. I went and asked my electrician and plumber if they could help me out a little and I would see if I could shave something off my end. I hate doing that but, I'm starting to think something is better than nothing. Anyway My electrician and plumber think nothing is better than something and pretty much told me to pound sand. Guess what time for a new plumber and electrician. I've been feeding them for a few years each. You would think they would help a little.

Mike Finley

I'll repost this cause it is relevant to your question:

480sparky

You were underbid. So what? Where is it written you will be awarded every job you bid on? Or even a majority of them?

I'll be willing to bet that someone complains about the bid you submitted for a job that was less than theirs, and they're bi**hing and moaning about how you cut them off at the knees, and you're not going to make any money on it,and how can you stay in business without making a profit.

The only difference between your 6200 bid and the winners 6000 bid is a night out for you and the misses..... nice steak dinner, a couple glasses of wine, and a movie. Your competitor decided he could live with a hot dog, a Coke and a DVD from NetFlix.

__________________
Site : the area or exact plot of ground on which anything is, has been, or is to be located.
Sight : The power or faculty of seeing; perception of objects by use of the eyes; vision.
Cite : To mention in support, proof, or confirmation; refer to as an example.

Mike Finley

If I read it right the difference was $1800.

480sparky

Not when I went to school.

__________________
Site : the area or exact plot of ground on which anything is, has been, or is to be located.
Sight : The power or faculty of seeing; perception of objects by use of the eyes; vision.
Cite : To mention in support, proof, or confirmation; refer to as an example.

Mike(VA)

He bid 6200, next lower bid was 6000, winning bid was 4400.

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I EXPECT THAT SOMEDAY I WILL SEE THE FRUITS OF MY LABOR. IS IT SOMEDAY YET?
Clifton, Great Falls, McLean, Fairfax Station, Manassas, Virginia Renovation Contractor

Mike Finley

That's the way I read it. An almost 30% difference isn't a normal spread in business no matter how much you want to chaulk it up, especially when the benchmark is a guy who has a history of already being in the low to middle in the order.

This crap is going on all over the country, read the article I printed.

480sparky

Where do you see 4400?

__________________
Site : the area or exact plot of ground on which anything is, has been, or is to be located.
Sight : The power or faculty of seeing; perception of objects by use of the eyes; vision.
Cite : To mention in support, proof, or confirmation; refer to as an example.

Tiger

$6200-$1800=$4400

This elementary math lesson was provided by the father of three math geniuses.

480sparky

I still don't see where the winning bid was 4400. OP said his original bid was 1800 high, so he lowered it to 6200. Only other price he stated was 6000.

Try English comprehension.

__________________
Site : the area or exact plot of ground on which anything is, has been, or is to be located.
Sight : The power or faculty of seeing; perception of objects by use of the eyes; vision.
Cite : To mention in support, proof, or confirmation; refer to as an example.

Tiger

I see your point. I can read it both ways. Maybe the OP will clear it up.

jaros bros.

I think the OP was simply pointing out his frustration with other contractors underbidding. I have had that experience in the past as well. If I bid $50K on a project and materials were 20K, someone else might come in and bid $25K. This actually happened and I pulled out a materials list and showed the HO why there was an inconsistency. In the end the HO still went with the lower price. Fact is, the consumer wants to think they are getting a good deal and will often bite even if there are warning signs.
I suspect that a lot of contractors are adding on extras at the end to make up for poor bids, or perhaps this is their strategy all along. Let's face it, most people expect the final cost to be higher than what they are originally quoted. And sometimes there are unknowns or change orders but many times this isn't the case.
I think the point is well made that when it comes to bidding, you have to be thorough and be assured that you are going to hit your profit margin for the job. I could care less what it costs Contractor Joe to do the job, I have to know what it will cost me and what I need to make in the end to make the job profitable. Those that lowball will eventually be forced out of business.
I think that is a selling point that we can make to our clients. If I can eliminate "extra charges" at the end, and I don't mean legitimate ones, that just make the customer feel more comfortable about the risk of starting a project. Part of the reason Hyundai is doing so well.

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Josh Jaros www.jarosbros.com Remodeling in The Woodlands, Texas

480sparky

It also may the the result of some really good business planning. Save some money when times are good so you can 'buy' jobs when the economy sours. It's betting the economy will turn around before you go broke, but sometimes the gamble pays of handsomly.

The winner may have simply dipped into his 'rainy-day' savings in order to get the job. Why? Maybe he smells other work in the future. Or could be he's got a killer crew and want to keep them.

__________________
Site : the area or exact plot of ground on which anything is, has been, or is to be located.
Sight : The power or faculty of seeing; perception of objects by use of the eyes; vision.
Cite : To mention in support, proof, or confirmation; refer to as an example.

B&C

To clear things up my original bis before changing was 6700 winning bid was 4900 I adjusted my bid to try and be more competitive and still couldnt get close. Changed out cheaper materials and cut off some of the time. I appreciate all the input.

Double-A

To answer your original question, B&C, they can't.

Someone touched on the 'buying' jobs part of the equation, but that is simply forestalling the inevitable. Its much better to scale back to a limited schedule than to keep your folks working on jobs that produce no income.

As Mike said, sometimes its better all around to just get out of the business. Remember, business is business, not ego, not self satisfaction, not salvation - just business.

Taking a job at a loss is only feasible if you have a plan in place to deal with the loss. The spray and pray method of working is just silly.

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"My clients’ wishes are the center of my attention." -- David Guido, a contractor in Woodstock, N.Y.
New York Times, July 20, 2006

BirmanBuilders

Myself and a contracting buddy of mine bid a commercial remodel. We're not dirt cheap but usually in the middle. GC gets back to me and said we were way high and somebody had beat us by 40% No way in hell it is humanly possible, maybe the other guy didn't price in the material. Somebody is going to get burned anyway. When I mentioned that to the GC he said well thats his problem! Idiot. Like my mother in law said "Put a penny on your head and that is how you will be treated."

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