Monday, May 17, 2010

You get what you pay for

2009 was a tough year for contract glaziers. Of the companies that made this year’s Top 50 Glaziers and provided exact sales figures for 2008 and 2009, 55 percent reported a decrease in sales volume. Glaziers cited decreased backlogs and increased competition among the reasons for the slide. Some described a bidding environment in which general contractors were “shopping numbers,” looking for the best deal. One company reported its competitor was bidding projects at cost, just to land the job.

Whether the fault lies with the clients for rewarding low bidders or with the glazing companies for submitting these bids in the first place, this type of environment is detrimental and frustrating for everyone involved.

I’m a firm believer, however, in the motto: “You get what you pay for.” And I think in the long run, our industry will actually benefit from this situation. If you’ve ever been burned by a service provider that you chose based solely on price, you know what I’m talking about. Oftentimes, it only takes one bad experience with a contractor to make you re-evaluate your selection criteria.

Companies that take jobs at unrealistic prices have to cut corners somewhere. As one glassblog reader pointed out: “If a contractor is 40 percent 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?” Unfortunately, for some clients, those shortcuts are applied to the building itself, costing them more to fix than it would have to hire a higher quality company initially. Fortunately, for us, these clients will be better educated when they spec their next project, recognizing the value higher-priced companies bring to the table in the form of quality products, trained personnel and customer service.

While I don’t wish this experience on anyone, clients that look only at the bid number and not at the glazier are setting themselves up for failure. My bet is they won’t make the same mistake twice. What’s yours?

Jenni Chase, Editor, Glass Magazine


Anonymous said...

Unfortunately, clients seem to have short memories. Or they don't know better. Or the players involved with an intially successful project get promoted.

Whatever the reason, the sweet allure of low price seems to linger long.

Anonymous said...

Obviously the author of this article has never seen hard times. Business 101: During hard times you sell the job at whatever price is necessary to get the job. If you need to bid it at cost you bid it at cost. You manage to keep your experienced employees and show them the loyalty they deserve, you keep your reputation plus your name in the forefront and you keep your business solvent to reemerge as a profitable entity when the economy turns around. Those who think the only explanation for low bidding must be cutting corners simply need to turn to their grandparents for an explanation.

Jenni Chase said...

In this economy, I think it is safe to say we've all fallen on hard times. And I agree that there are ways to lower expenses without compromising your quality of service. But competing on price alone is, in my opinion, a dangerous game. One need only look at the auto glass side of the industry to see the negative consequences it can have.

Anonymous said...

Many Contracters in my area as well as others have lost their business.
The few business still trying to pull out of the fall out are now having to compete with the displaced workers who are working under the table.In a small community people don't even seem to care if you have insurance let alone have a contractors License

Anonymous said...

When you start bidding jobs at cost, the corner cutting comes in the form of not paying your bills. It also erodes the market. It will for sure eliminate those that did not start lowering there overhead at least two years ago. Low bidding will eat your cash flow and savings. Low bid, it never made sense to me. Everyone wants to keep key employees. Hard Times! This is an economy that has not been experienced since 1929. The Wal-Mart mentality, (roll back the prices) is here to stay! Over 15 million jobs are gone in this country. You need to cover your overhead and make a profit. Its called get lean. This economy is not out of the woods yet. Our glass industry alone produces over 75% of glass overseas. That is just our industry. If you do not have deep pockets, focus on service, training and reasonable prices with profit. Those that do not will be gone before next year. Mark.