Monday, October 5, 2009

Bidding wars: Price vs. quality

Talking to attendees and exhibitors at GlassBuild America: The Glass, Window & Door Expo, I repeatedly heard stories of companies involved in bidding wars where the job ultimately went to the lowest bidder without regard to the quality of its product or service. In one incident, a developer installed more than $1 million worth of windows, only to pull them out due to poor quality, said Charlotte Broussard, owner and CEO of Universal Window and Door LLC, Marlborough, Mass. “Out of fear, people are going after price and not [paying attention to] the quality of the product,” she said. There have been projects where Universal was underbid by 40 percent, and the company ended up going back and doing the projects over because the developer had to pull the original product, she said. “It is becoming a real problem.”

“Our customers are hard bidding jobs and [developers] are going with the best price,” said Tom O’Malley, vice president of sales, Doralco, Alsip, Ill. “The building owners are almost making it a bidding war to see how desperate people will get. Companies are taking jobs at prices that they shouldn’t be at. We’re obviously looking at our costs, but we’re not going to put ourselves in a position to go out of business. There are some people out there that are [putting themselves in that position],” he said.

Education is the answer to the problem, said Paul Weisblatt, technical director, Universal Window and Door. “We’re doing our best to educate the customer with regard to why they’re going to pay what they’re going to pay,” he said. “It costs money; you can’t compare [a value-added product] against a price-only product and expect to get the same performance.”

Has your company been involved in bidding wars where the customer has turned a blind eye to quality and gone with the lowest price instead? What are you doing to convince them that there’s more to choosing a product or service than dollars and cents?

—By Jenni Chase, Editor, Glass Magazine


Anonymous said...

Here in British Columbia we are experiencing a surge in demand, business has increased dramatically in the last 8 weeks. And yet we are still seeing lesser quality competitiors "giving" product away to land jobs. There has to be an end to it when they are selling at less than our cost.

Anonymous said...

This is not unusual in our (or any) industry, just gets highlighted when there is less backlog to rely upon. In the long run , the "less than perfect, under priced guys that keep the rest of us up at night scratching our heads on how they stay in business", competitors will be around until they run out of money, Problem is how much damage is done to reputable guys (and the industry) in the meantime.
A large part of responsibility has to be laid at the buyers, if a contractor is 40% less than the rest, there is a reason. Material does not have that much of a swing from one guy to another, so.... where are the shortcuts going to be applied.
It is tough and there is no easy or correct answer. Hopefully we can all hang on until the "non-quality concious" companies fall on their faces ..... or learn.
good luck to all

Jim Fairley

Anonymous said...

Here in California we are experiencing the bidding wars as well as the tempering glass companies (some not all) are selling glass to non licensed individuals, they are the ones that are low balling. This should be mandated that to purchase the products in our industry a state contractors license is required.