A contractor doing work for a company nearby approached me about making repairs to our loading dock. His pitch: since he was installing new dock bumpers for the other company, he could make repairs to ours at “a very low cost.”
“How low?” I asked.
“$2,500.00.” he replied.
This seemed high to me for a minor repair.
“Well, how about $1,600.00?” said the man, who I’ll call ‘Contractor A.’
I reached out to our regular contractor, the one we’ve used before on many jobs. Let’s call him ‘Contractor B.’ He provided a written quote, spelling out all the details, for $1,980.00.
Now, I’m friendly with the nearby company that engaged Contractor A. I asked, and they had only good things to say about his firm’s work.
So did I engage Contractor A and save $480.00?
I did not -- for three reasons. (1) We have worked with Contractor B for years. (2) Contractor B always treated us fairly. (3) Contractor B provided a written quote, whereas Contractor A only gave us a verbal quote.
Truth be told, I was soured by the off-the-cuff, $2,500 quote that was immediately reduced to $1,600 when I balked. There was no “trade-off” involved. Had Contractor A said that by using a different material or by slotting the work into a slower period he could reduce the price, maybe then there would have been a rationale for the price reduction. So, in my mind, he’d attempted to gouge me with his original quote.
By contrast, Contractor B explained that it would be a relatively costly job for him because he would use treated timbers not obtainable in the immediate area. The right timber would last many years longer, he said. Plus, his proposal included detailed information regarding the hardware he would use.
My perception was that Contractor A would charge whatever the market would bear. My suspicion was that his price drop would be achieved with inferior materials.
Maybe your customers think the way I do. If they do, follow these guidelines:
1. Substantiate your pricing using empirical information, references or a sensible narrative.
2. If you alter your quote, provide your rationale for doing so.
3. Loyalty is a two-way proposition.