How to Get Yourself Out of the Low-Price Game

In Best Practices, FINANCE, Payment
May 23, 2022
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By Zach Richmond, Kent Companies

Bidding to win is no simple ball game. The competitive field is stronger than ever, so how will you stand out among the crowd? Top subcontractors differentiate by demonstrating value up front. You can make an impact on your customers by rethinking how you bid. Start by creating a value proposition that highlights your unique capabilities. Instead of always coming down to negotiating on price, you elevate the game by focusing on how to best achieve the project’s end goal. Stay competitive and strategize with these tips to step up to the plate.

Detail your scope. Forming a scope of work from construction drawings and specifications may seem like a routine task to many specialty subcontractors. We all do plenty of takeoffs, estimates and know our numbers. Yet, bidding to win is so much more than putting a price on a project. It’s more advantageous to position your bid within your company’s niche and tell the story of how you can uniquely perform the job. You may swing and miss if you bat solely with a low price.
Showcase your experience. Business is changing, and so are expectations. Involve your marketing department to highlight project profiles similar to what you’re bidding on included in the bid documents. There is no quick fix to create a winning construction bid. The right keystone habit sets you apart and makes you the most consistent player in the room. There’s a multitude of ways to differentiate your bid than merely bidding low. Think about the entire package and showcasing your experience.
Deliver on expectations. Today’s decision makers expect the best fit for every project. Be the expert they rely on. A recent study by Hinge Marketing showed that over a five-year period client loyalty declined by 20% even though client satisfaction remained stable, showing us business is less loyalty-based. Today’s customers are looking for the perfect fit. Always pull relevant past performance to demonstrate why you are uniquely qualified to perform the work. General contractors care about who is building the project, not just how it is built. Hone in on storytelling to share your project team’s experience, craftsmanship and unparalleled skillset. Equip your customer with every answer to each question they may ask about why you are more fit than your competitors.
Begin with the basics. Start with the first step in your action plan. When bidding work to drawings and specifications, give the customer what they want. This will come in the form of a base bid. The customer is likely looking for the minimum per the drawings and specifications. Hit the industry standards for your base bid to get on an even playing field. Then, consider taking more of a consultative selling approach. Provide a base bid as an apples-to-apples but offer more value with solutions that enhance the project, save time or money.
Cover all the bases. Enhance your offerings by providing alternatives and upgrades. Make a unique offer to add in and package services that others often overlook. Keep the voluntary alternatives and upgrades separate from the base bid. This allows you to uniquely position your company by presenting offers others might not have spotted. Look for opportunities for volume-based offers. This will help drive your bottom line.
Offer value engineering services. As specialty subcontractors, we all have unique experiences under our belt. We’re equipped with the knowledge of the tricks of the trade. It’s our responsibility to help general contractors through the building process – every step of the way.

Through value engineering, you can use a systematic approach to improving the project at stake. Using your past experience to your advantage allows you to offer suggestions on how to conduct work. It sets you apart because you can anticipate challenges they may face. Concentrate your focus on the niche, and specific project types you have worked on to serve as precedents. It also may reduce your chances of being priced out of the project. Be the expert in your respective field to help the general contractor through any obstacles.

Bidding in a competitive market doesn’t come without its challenges, and you may have a few curve balls thrown your way. There are many qualified specialty contractors, making competition tight. Materials and supply prices are escalating faster than ever. Your bids have to be complete and all-encompassing with quickly fluctuating prices.

Change how the conversation is framed. If the dialogue is always around being the low bidder, get your customer to remember the last time they went with the low-cost provider and things didn’t go right. Find the intersection of the numbers, the craft professionals, the relationships and the strategic plan that gets you where you want to go. Earn the repeat work you deserve.

To hit a home run each time, enter bidding with the owner’s end result in mind. The general contractor wants the owner to be happy, and you want the general contractor to be happy. This mindset allows you to see from their perspective and adapt your proposed plan accordingly.

You’re bidding in the major leagues. It’s competitive and complex. Differentiate your expertise and demonstrate it. Keep the end-user in mind, and hit it out of the park.

Source:

Inside the Buyer’s Brain, Third Edition: Executive Summary, Hinge Marketing: https://hingemarketing.com/library/article/inside-the-buyers-brain-third-edition-executive-summary

About the Author:

Zach Richmond is a Business Development Manager at Kent Companies, Inc. – the 9th largest concrete contractor nationwide. With more than seven years of experience in bidding, estimating and sales, he specializes in facilities services and building restoration.