The ethics of a 'guaranteed lowest bid' policy?

[ward]

The ethics of a \'guaranteed lowest bid\' policy?

Been seeing this one in the froth lately. Customer tells me that Tree Service ___ will guarantee any bid by a certified arborist and lower it by 5%. Another guy offers a guaranteed lower bid.

First off, this strikes me as a doomed business policy. If you have to match the lowest bid and exceed it...well thats a race to the bottom now isn't it? For yourself and for the rest of the industry.

Second--and this is the real rub--it presupposes that he will be able to ask the client for what the bid numbers of other tree services are and be able to modify his bid accordingly. Is this a skillful marketing campaign or is it shady business ethics?

I cannot imagine a publics work project being bid in this manner--where each bidder gets to peek and see what the others bid it for--or retroactively alter their bids once they know that information. Neither does it seem right that one should directly solicit the numbers of other bidders when dealing with a homeowner. I can't imagine asking the client directly what another guy bid the job for before I give my bid. Seems wrong to me for some reason. If the customer volunteers it, I sort of wince at having heard something I shouldn't have.

I just give them the numbers I think I can do the work for. I just don't like to see little parlor tricks that can be used to cheat somebody out of their mealticket become standard operating procedure in our market.

Bid the jobs on your own merits, not piggybacking onto and unfairly undercutting on the strengths of other firms pricing.

What say you, then...

 

[RyanCafferky]

Re: The ethics of a \'guaranteed lowest bid\' policy?

I heard from a small tree care company in my area that the big tree service in town was doing this. He was submitting a bid and the client admitted that the other tree service owner had told him he would beat any price. After hearing that, he told the client to tell the other tree service owner that his bid was now $1.

I just don't care to be chasing jobs like this. If I hear that someone is getting multiple bids I often won't even go look at the work or I will take my sweet time getting to that estimate and then give a real price for the work. I feel bad for tree services in Portland with all of the cutthroat competition there.

 

[flyingsquirrel25]

Re: The ethics of a \'guaranteed lowest bid\' policy?

I have always had customers hint at other bid numbers. I never pay them any mind. Just last week a potential client asked me to look at 2 hickory removals at a little league field. He promptly gave me the lowest bid so far and said do what you will with the number. I almost said ok, Im not going to look at the trees. But curiocity got the best of me. Went out saturday and sent my estimate over for just under 3000 more than his "lowest bid". I told him up front my number is my number. There is no way I am going to cut my throat just to get another job. The guy that bid that is going to loose his a$$ if the lowest bid gets it.

Its cutthroat around here too, just gotta market yourself and offer the customer something the other guy wont... Quality and life is good. If they are looking for the lowest bid, you dont want them as a client anyhow.

 

[ward]

Re: The ethics of a \'guaranteed lowest bid\' policy?

[ QUOTE ]
I have always had customers hint at other bid numbers. I never pay them any mind. Just last week a potential client asked me to look at 2 hickory removals at a little league field. He promptly gave me the lowest bid so far and said do what you will with the number. I almost said ok, Im not going to look at the trees. But curiocity got the best of me. Went out saturday and sent my estimate over for just under 3000 more than his "lowest bid". I told him up front my number is my number. There is no way I am going to cut my throat just to get another job. The guy that bid that is going to loose his a$$ if the lowest bid gets it.


[/ QUOTE ]

I do it all the time: give the appropriate bid and stoically/resolutely take what I get. In your case above I would bet that you didn't get the bid (might have, don't know). Thats a lot of time wasted on visiting the property, talking with the client, filling out the bid, etc. Wasted time and money.

The guaranteed lowest bidder doesn't even need to visit the jobsite. He can just ask the homeowner for a full description of the work that you wrote down on your bid and then offer to do it a little bit lower.

There is so much work at this time in the season that its not a big issue. I like Ryan's approach to pre-sorting clients based on these kind of variables. If the client reveals that they are merely using you for a proper bid with all of the work carefully described so that they can then turn it over to the bargain basement crew for below your price, I take measures to avoid them, too.

I've even gone so far to try to explain to clients how careless this manner of bidding jobs is and demonstrates a lack of competence in the business. Truly. If you don't know how to price your work and justify it on its own grounds, then you ought not to be bidding work. I don't have an enormous amount of extra into my bids--they are accurate statements of our time and costs and fair. How on earth somebody can just automatically state that they will beat any price is beyond reason.

I love that answer: "Here is my bid, then, Mrs. Jones. The whole massive hazardous Oak Removal for $1: tell them they must beat that price or they violate their oath!"

 

[MooseHead]

Re: The ethics of a \'guaranteed lowest bid\' policy?

I would give all of my friends a big time lowball bid on some nasty work and then get them to call that guy. He will kill himself with labor and if he doesn't do the job your friends can write complaints about the company.

 

[rfwoodvt]

Re: The ethics of a \'guaranteed lowest bid\' policy?

We have at least two outfits that play this game.

One is simply out to get every job possible. When I know they are bidding on the same work I withdraw from the process. I know there is no way I will compete. When the customer asks why I simply tell them, "XYZ will be significantly lower than I can do it for so I won't waste our time."

Of course XYZ also drops the ball on many of their jobs because it seems after winning so many bids, they do the more profitable ones first and let the others hang in limbo.

Quite frequently I get a call back telling me XYZ seems to have dropped off the face of the earth, "can you give me your price to do the work?"

I have learned that when the cust calls me back like this I ask them flat out if they will be giving xyz a final call after I give them the numbers.

If they say "yes" then I won't do the bid or the job. I explain that quite often xyz amazingly finds time to do their job when they hear someone else is scheduled to do it instead.

Then there is the other company, the one that plays dirty, the one that has been caught lying to customers, the one that claims credentials they don't have, the one that tells prospects I'm a convicted felon, the one that seems to think I'm responsible for upsetting their apple cart and reporting them for false advertising.

This outfit will ask if I've bid on the work and if I have, what's my bid. They will undercut me. Even if it costs them, it seems they just want to put me out of business and consider such losses worth while.

I should have known this outfit hated me early on when I would call them to get a price for subbing out my crane work and they'd give me a really high rate making it impossible for me to successfully bid the job. Then I'd find that they got the job from the customer at less than they were going to charge me.

Anyhow, when it comes to comparing bids we have this on our website:

[ QUOTE ]
Always be suspicious of low bids. Low bidders frequently do not carry liability or workers compensation insurance, often don't pay their employees' Social Security or Medicare taxes, cut corners on safety, aren't trained in proper tree work or will be careless around your property.


If you are considering hiring the lowest bidder don't be afraid to ask some serious questions. Ask them for a current copy of thier Certificate of Insurance before you sign the contract.


Be sure the certificate comes to you directly from their insurance company. If they try to hand you a copy don't accept it as it may be invalid! All reputable companies are accustomed to having certificates sent by their insurer. If a provider refuses to have thier insurer send it, look for a new provider.


Hivernant understands that price plays a large role in whether or not you will hire us to do your work. Even though we frequently are not lowest bidder, we are always an an Honest Bidder. We promise to give you our best price the first time!



[/ QUOTE ]

 

[ward]

Re: The ethics of a \'guaranteed lowest bid\' policy?

[ QUOTE ]
We have at least two outfits that play this game.

One is simply out to get every job possible. When I know they are bidding on the same work I withdraw from the process. I know there is no way I will compete. When the customer asks why I simply tell them, "XYZ will be significantly lower than I can do it for so I won't waste our time."

Of course XYZ also drops the ball on many of their jobs because it seems after winning so many bids, they do the more profitable ones first and let the others hang in limbo.



[/ QUOTE ]

[/ QUOTE ]

Thanks for that Rick. I just keep chuckling over "XYZ". I guess the emphasis there being on the Z. Ha!

All good advice by the way. Just one more to thing to have to look out for.

I was thinking that the ISA might take a more visible posture on the ethics of bidding. Currently we all sign on to a code of ethics, but there is no real statement regarding the ethics of bidding. Seems like this is an area where members can come into conflict with each other--even with non-members. Must be something said...

 

[flyingsquirrel25]

Re: The ethics of a \'guaranteed lowest bid\' policy?

[ QUOTE ]

I was thinking that the ISA might take a more visible posture on the ethics of bidding. Currently we all sign on to a code of ethics, but there is no real statement regarding the ethics of bidding. Seems like this is an area where members can come into conflict with each other--even with non-members. Must be something said...

[/ QUOTE ]

I agree in a way, but I dont think it will solve a whole lot. The guys (atleast in my area) that cut bids and guarantee the lowest price, arent certified anyhow.

 

[treehumper]

Re: The ethics of a \'guaranteed lowest bid\' policy?

The ISA would have to be very careful about creating a statement as this starts to move toward price fixing schemes.

As for multiple bid jobs I've often asked what is the most important aspect for the client. If it's all about the cheapest price I'll shy away with a heads up to them about low bidders as mentioned above. This sometimes brings them around to reconsider their priorities.