He said he knew very well what his competitors were charging. He told me that he could have a line of customers around the block if he kept lowering his prices, but he wouldn’t be working smart. His margins would be lower, he’d be expending manpower working cheaply, and he’d be distracted from going after more profitable endeavors and servicing his repeat and infinitely more valuable commercial accounts. Homeowners come in for a key copy occasionally, at best, but your commercial accounts pay the bills.
Another successful locksmith I did business with along the way put it another way; he said by undercharging, you reduced your activities to ‘exchanging money’ rather than you getting more than it cost you to perform the service. He was against lowering his prices to where he was breaking even or losing money.
Often a mistake will be made in the bidding process where you overlooked something and wound up low bidder by accident. Some guys will deliberately low ball a job. Sometimes it is to frustrate the competitors. Sometimes it is to get their foot in the door.
The idea of losing money on the first project with hopes of making it back on the next job is a tactic you may either do intentionally or a rationalization you will employ if you messed up. I imagine most readers can say they’ve been there and done that already.
I have observed situations where low bidding, and then experiencing project delays or other problems, has led to credit crunch and or cash flow problems. Many mergers and acquisitions are the result of a company overextending itself trying to grow the business, getting stuck, then having to sell to a former competitor.
The contracting entity hopes that by requiring a site survey, bidders will pay attention and price the job carefully. This will hopefully result in a better installation for the best price, and the client can make it part of the contract that the dealer cannot use not seeing the project as an excuse for not doing the job right, or as an excuse for a change order, confusion about the scope of work or justification for an up charge or project delay.
Many times a site survey is part of the sales process and the survey is important for three reasons.
One: It is an opportunity for you to develop a relationship with the client by meeting him on his turf. In this modern era, many people try to build a relationship with an email or a telephone conversation. Although these are important communication tools, in some cases an in-person meeting is desirable. Telephones are good for taking orders, like you order a cheese pizza over the phone. Making a sale is not the same as taking an order. Emails are best when used for follow up or exchanging information, not embarking on a new relationship. Also emails are best when they are short and to the point.
Two: The survey gives you the opportunity to see the site first-hand to best evaluate what is required. Usually the survey will reveal things the owner failed to divulge, or allow you to see opportunities for other sales.
The primary mission is to provide the customer what he wants, but it has been my experience that once I gain the client’s trust, he is likely to ask me to recommend products in order to achieve what he wants. I know I have a warehouse full of equipment, and it would be great to bring a few truckloads of it over, but that isn’t how it works. Customers are usually interested in hearing what you have to say, unless they were issued a punch list and strict orders not to deviate from it, in which case they are looking to place an order, so you can do this over the phone and email.
Third: The survey is when you will not only design the system you are offering but also try to figure out how you are going to install it so you can make your best guesstimate on the labor which will be required.
One of the best parts of doing site surveys is that you are never exactly sure what you are going to encounter. If a security professional is poised to offer a number of different products and services, he is creating opportunities for himself when he walks onto a new site.
Realistically, every site survey does not result in a sale, but that’s how it goes in sales. But going in person, making a professional and non-threatening presentation, being alert and taking good notes will increase your chances of creating a new account, closing a sale and finding unexpected needs you can professionally fulfill for the end-user.
Manage projects through effective site surveying.
Some of my best accounts began when I got my foot in the door by winning a low bid for a small project.