We’re Probably Not the Low Bidder

Published: December 1, 2013 - by Dan Holohan

Categories: The Business of Heating, For Homeowners

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Good morning!  Here’s my company’s proposal.  It covers everything we discussed as well as the alternates for the additional work you said you would consider.  We’re probably not the low bidder on your job, and I want to take a few minutes to explain why.

            Most heating contractors buy their materials from a plumbing and heating wholesaler right here in town.  We all pay the same prices.  Our wholesaler stocks material that falls into the “good,” better,” and “best” categories.  You’ll recall we talked about this when we discussed your job.  If one contractor’s price is lower than another’s the difference is probably not coming from the cost of the material, unless, of course, the low bidder isn’t dealing with a legitimate plumbing and heating wholesaler.

            Some low bidders buy their materials from a home center.  Home centers run sales on “loss leaders” every week.  Low bidders see this as a way to shave a few bucks from the cost of the material.  You could go to the home center and get the same price on that “loss leader” if you wanted.

            We don’t buy from the home center.  We prefer to get all our material at the plumbing and heating wholesaler because they carry a full line of top-quality, heating equipment, things you can’t find at the home center. We support our local wholesaler because they’re essential to our ability to give you great service.  When we need something special, or an oddball part in a big hurry, these guys will drop what they’re doing to service us.  The home center won’t do that for us, nor will they do it for the low bidder.  We’ve found it pays to develop a good relationship with a full-line supplier.

            A customer we’d quoted called us recently for help.  He had hired the low bidder to do the original installation, but now he had a problem with the product.  Rather than take care of his problem, the low bidder told the customer to call the home center.  He tried that, but got a run-around.  The contractor told the customer he didn’t have time for problems, and besides, how could he expect good service when his price had been so low.  We took care of that family, and we charged them a fair price.

            If you find our price is higher than the low bidder’s, make sure they’re offering you the same material we discussed.  Make sure they’re not cutting corners by eliminating components or substituting cheap material.  Remember, a car may be a car, but a BMW is very different from a Yugo.  Be a wise consumer, and keep in mind, if we’re all getting our material from a legitimate source, we’re all paying the same price.  If there’s a wild difference in our prices, that difference has to be coming from someplace else.

            Maybe the low bidder has simply decided to work for less profit.  Maybe he figures he can make it up on volume. We see that business philosophy in a lot of places nowadays.

            But the low bidder has to pay the same price for a truck as we do.  And gas is no cheaper at his gas station than it is at ours.  Quality tools cost money, so does liability insurance, workman’s compensation, the cost of clean uniforms, drop cloths and safety equipment.  These bills must be paid.

            Many low bidders have no idea what their operating costs are.  They’ve never taken a business course, and they live from job to job.  As a result, many of them go out of business.  If you have a problem a year or so after the installation, there’s a good chance the low bidder will be gone, or operating under an different name.  Either way, you’re stuck with the problem.

            The difference between our price and the low bidders’ has to be coming from someplace. Chances are it’s coming from his mechanic’s salary; low bidders usually pay their mechanics less than we do.  After all, they’re the low bidder.

            Low bidders generally have a tough time attracting skilled craftsmen.  Skilled craftsmen earn good wages because they work neatly and quickly and they know exactly what they’re doing.  We’d send nothing less than a skilled craftsman to work in your home.  Would you expect anything less?

            Low bidders typically hire people with limited experience.  These novice mechanics are willing to work cheaply because they have little or no training.  They need on-the-job experience.  Unfortunately, they want to get it on your job.

            Low bidders don’t allow much margin for error.  If there’s a problem, low bidders return to your home reluctantly, and usually because you threatened them.  More often than not, you wind up with a patch job, performed by an angry, surly man who resents you, even though you hired him and paid him promptly.

            Low bidders usually don’t have any sort of support staff.  If you call with a question, you get to speak to an answering machine, at worst, or an answering service, at best.  Rarely will you get someone who can answer your technical or billing questions competently and on the spot.

            Since the low bidder doesn’t know his real cost of doing business, he won’t set aside money to replace or repair that old truck or those old tools.  The result?  You’re home waiting for him to show up, but he’s broken down on the road with no way of getting in touch with you.  He has no car phone.  He has no two-way radio.  He has no support staff.  He’s the low bidder.  He can’t afford these business tools.

            The low bidder sets no money aside for the future.  He lives from job to job.  He often falls behind on his payments to his suppliers.  They cut him off and he’s forced to make excuses to you. You can’t have your new boiler or water heater or whatever because “the manufacturer didn’t ship on time,” or “the truck broke down,” or “there’s a strike at the factory.”  You’ll just have to wait . . . or you’ll have to pay him the full price in advance, and in cash.  And don’t be surprised if he uses this money to finish his last job, rather than start yours.

            The low bidder rarely takes time to read or do research or attend educational seminars.  He’s too busy running around trying to make a profit by losing money on each job.  He’s not really interested in the latest products and technological advances.  He has no time to learn new things.  He thinks “plain-vanilla” is good enough for you.  He won’t take the time to show you a menu of products, nor will he consider how your comfort needs can best be served in the most economical way.  He’ll just ask what you want, and then give you a low-ball price.

            The low bidder may not have a good relationship with the local code officials.  Years of cutting corners under various company names have probably made the inspectors wary of this guy.  They’ll go over his jobs with a fine-tooth comb, and often insist he redo things.  He’ll resent this, and he may ask you for more money after he’s started your job.  He might even put you in the middle of the argument with the inspector, and perhaps even the local utility.

            And while all this is going on, your heating system will be laying dormant.  After all, if the low bidder can’t afford to do the job right, he certainly can’t afford to do the job twice.

            We’re probably not the low bidder on this job, but I assure you we have given you our best price for the value we offer.  And when you need us in the years to come, we’ll be there to serve.

            Thanks for your consideration.