11.30.10
Seduction of the Low Bid
“We want to avoid the “seduction of the low bid,” exclaimed the vice president of a nationally recognized general contractor. It was music to the ears of the gathered subcontractors as he went on to explain the five critical aspects of selecting a proposal to perform a particular scope of work.
1.Capabilities- does the subcontractor have the resources to fulfill the required aspects of the contract
2.Scope- has the subcontractor covered all of the details of the work to be completed
3.Terms- does the subcontractor understand the terms of the contract in regards to payment, retentions, etc.
4.Schedule- does the subcontractor understand when their part of the contract is to be delivered and installed
5.Price- does the subcontractor’s proposal price offer the best value when all of the above factors are considered
Most distributors and business owners constantly fight the battle of the “seduction of the low bid/price”. The challenge is teaching sales representatives to have a process to minimize the focus on price of the retail store owner and help them consider all of the factors surrounding a particular product. I’ve noticed that many businesses express their frustration but haven’t offered a formalized process to counter the low price arguments in the field.
Perhaps coming up with your own five critical aspects for a product would be helpful. Based on the list above, it could assist the sales representative and retailer by focusing them on other critical items instead of just the price.
Regards,
Brian Boek
