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Why Customers Lose When Choosing the Lowest Price

It’s a common trick in the commercial cleaning industry, as well as many other service industries. Use a low priced bid to win the business, then under deliver your service (hoping the customer won’t notice) or ask for more money at a later date.

We’ve seen it time and time again. We’ve lost business because of it.  For us, one instance stands out as a shining example of this flawed strategy.

For six years, we provided the daily cleaning for a very challenging building and in general, had a very satisfied client for those six years. When the building came to tender, it became abundently clear the personel in charge of creating the scope for the RFP were uneducated, inexperienced and focused on trying to get more for less. What was created was a scope of work that would at least double their current budget. Yet, what was awareded was a contract to a company that bid amost half of the current budget. Sorry, the math just didn’t work and why the building’s managers couldn’t see that is baffling.

Follow these tips so you don’t fall victim to the low price trap on your next request for proposal.

  • Ensure the scope of work and the budget you have allocated are in sync. If you are not sure how to do this, ask a trusted advisor that has this experience.
  • Another option to ensure your work and budget are realistic, is to do a pre-proposal walk-through with the bidding contractors. Outline what your high/low priority areas are and then ask them to provide a recommended scope and price based on that. This strategy can be tricky to compare apples to apples but it allows the contractors offer up their expertise and provide a balance between performance and efficiencies.
  • Ask around, find out what companies your peers are using. What companies have proven to be trustworthy, which haven’t. Then compile a list of contractors you would be open to working with and invite them to bid on your work.
  • If you are already in a position where you are working with a contractor that played the low price trick on you and you’re seeing that negative results, start looking for alternative services.

Our company philosophy, as is for some other building service contractors, is to provide “real” pricing and work scopes that represent value and honesty. We may not always win business with this strategy, but when we are able work to with customers that understand it and hire us for it, we are able to forge an honest and respectful relationship from the start.

The low price option always ends the same way. The customer loses with poor cleaning performance and a dirtier building and added work load to manage a cleaning program that isn’t working and then having to repeat the RFP process all over again.

By the way, the building that we lost to the low baller is now looking like it. Don’t ever doubt the old adage, “you get what you pay for”. Especially when it comes to the cleanliness and health of your building.

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EFS Clean Building Services is Calgary’s locally-owned-and-grown commercial cleaning company and authorized dealer for Ceiling Pro International. Our services include Contract Cleaning, Post-Construction Cleaning as well as specialty services; Ceiling Cleaning, Floor and Carpet Cleaning, Electrostatic Disinfecting and Quality Assurance Inspections. Let us help you get a better clean by calling 403-949-3344 or by requesting a cleaning quote/demo.

 

 

 

 

Beware of the Cost of the “Lowest Price” Game

The “lowest price” game is a bad business strategy. Unfortunately, it is a common one.

I saw it when I was in radio advertising. The unskilled salespeople resorted to selling their “puffs of broadcast air” based on price. Those of us (yes, I’m putting myself in this camp) who were good marketers and competent salespeople, sold that same air for top dollar based on valuable expertise and a track record of quality advice and results.

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