28 January 2008

Competitive bids

I sent out a proposal to someone who was referred to me a week ago. I did a proposal for a Cadillac-version of a kitchen renovation for them. They wouldn't tell me what their budget was, they wanted a lot of vague, nice touches and so that's what I gave them. I explained to them in a cover letter that what I had provided them was a proposal and that it was the beginning of a conversation. The perspective drawings I sent them showed what we'd talked about, and the price information I sent them was how much a kitchen containing the features I used would cost.

I received an e-mail back that they appreciated all of my hard work, but that they were getting two more "competitive bids" and they would get back to me.

A lot of people subscribe to the belief that they need to get three competitive bids before getting any work done on their homes and then they should go with the lowest bid. That sounds like a recipe for heartache to me.

Here's why: for starters, bids can only be competitive if your three bidders are pricing identical things. They can only price identical things if you write them a spec sheet and say; "Here, price this." If you don't know how to write specs for something you want to have done on your home you can either learn how or you can try a new tack.

Try this next time. Interview a bunch of bidders and go with the one who makes you comfortable. Or go with the one whom you trust. Or go with the one who has a track record he or she can prove to you through references. Construction stuff of similar quality costs about the same regardless who's providing them.

If the folks I wrote about at the beginning of this are getting bids and that's their prerogative. Had I known that all along I would not have invested the time in their proposal that I did, that's for sure. Had I known that from the start, I would have outlined the specifications I was planning to follow (since they didn't have a clue) and I would written that down and given it to them to use for their other bids. If I'm going to have to compete for something, I am going to do everything in my power to level the field, believe me. So now these fine folks have my proposal that they think is a bid. If they go to two other bottom feeders, they will get bids from them that are half the price of my proposal and I will look like I over charge. I don't over charge though. I sell a better product than what you'd find at a home center or a buyer's club.

It's as if you went to a BMW dealer and said, "I want a car, how much for a car?" The dealer will come back with a bunch of questions and through those questions will figure out what you want. Then he'll look you in the eye and tell you that what you want costs $55,000.

Armed with that information, you drive down the road and go to a KIA dealer and go through the same thing. The KIA guy comes up with a price of $18,000.

Finally, you go to a Dodge Dealer and he's having a special on Neons and he can put you in a Neon for $14,000.

So now you have three prices, three competitive bids in a very warped sense of the term. They tell you nothing about the comparative value of those three kinds of cars. They are three prices for three very different things.

So with that off my chest, I have this to say: go get your bids if that will give you a sense of control. But tell the people you're getting them from what you're doing. Be sure you are pricing identical things if you're comparing prices. But be warned, when you're contemplating something as complicated as a renovation or a construction project, direct comparisons are nearly impossible. So find someone you trust, it will cost you less in the long run.

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