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Home > Lowe's for Pros > Stay Competitive Through Better Bidding

Stay Competitive Through Better Bidding

Stay Competitive Through Better Bidding

The housing market continues to stagnate while inventories grow, which only causes competition in the marketplace to increase. An unfortunate consequence of these conditions is that potential clients could start to harbor unrealistic expectations about how low you are willing to go to get their business.

Whether you provide an actual hard bid or engage in more of a negotiation, proposing a price for your services is one of the most important interactions you can have with your client. "You couldn't give it a higher ranking," says Mike Brown, board member of the National Association of Home Builders. "It's truly the difference between making money and going broke."

Refine your bidding process and maximize your potential to make a favorable impression on clients by adhering to these tips.

It's not always about having the cheapest product.While clients do like a low price, they also want quality. If yours is not the cheapest bid, show the client what makes you stand out. Put together a sharp presentation packet to leave behind. Emphasize your certifications, customer service, cleanliness and anything else that separates your service from the competition. Your goal is to differentiate yourself through a record of professionalism, experience and proven performance.

Avoid estimates.Brown says that providing a potential client with a "hard cost," as opposed to an estimate makes a more positive impression. "Customers feel frustrated when you give estimates because they are looking for the fine print and asterisks." Providing a hard price - one that is guaranteed for a set period of time and allows for minimal negotiation - can prevent disappointment for your clients.

Don't estimate per square foot.Estimating the cost of a project solely by the square footage of a property is one of the biggest mistakes a builder can make. "You're always going to be wrong," says Tom Sertich, past president and chairman of the board for the National Association of the Remodeling Industry (NARI). "Everybody's situation is different." Whenever possible, avoid estimates from a print and instead make an on-site assessments that considers the work environment and the workmanship of those who went before you.

Give an allowance.If a client has trouble making up their mind between materials or fixtures, consider giving them an allowance. When you write up your bid or contract include a dollar amount. This allows the client to have more time to be sure of what they want without causing too much delay. "But you have to be close to what they need which is why questions are so important," says Sertich

Ask questions.Offering a realistic, hard figure and keeping the client happy means understanding exactly what the client needs, which means having an in depth conversation. "A lot of contractors don't ask enough questions," says Sertich. For example if there is plumbing involved, find out if it's going to be an under mount sink or self rimming sink. What counter top material do they want? "The most important thing you have to do when you're talking with a customer is you have to listen," says Sertich. "If you come back [for a follow up visit] and you haven't listened, you've lost all integrity with the customer."

Incorporate value engineering.Finding ways to get the highest value and use out of your materials for the lowest cost can help you to keep your bid low. Mike Brown noticed that by using smaller pieces lumber, as opposed to much larger and more expensive dimensional lumber, the result was "straighter walls and ceiling lines due to the trusses and panels being built in a controlled environment," Brown says.

Focus on customer relations.If repeat business and referrals are the bread and butter of steady times, then they are definitely the water and essential nutrients during times like these, so make sure you make relationship management a high priority.

Make every effort to see former clients, engage referrals and communicate with anyone who may have potential business. Offer repeat clients discounts on inventory as well as services where possible. "In a down economy you have to have taken care of your past customers," says Sertich. "They are the ones who are going to help you through the tough times."

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