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The True Cost of the Lowest Bid

When you are bidding against another company you might (and probably have to) sacrifice your morals just to have the lowest price. But what does that underbidding actually cost?

I like to win. I really like to win. When you are bidding against another company you might (and probably have to) sacrifice your morals just to have the lowest price. So often in this industry the client believes that the lowest price is the best price. Today’s society has grown up believing the lowest price is king; eBay, Amazon, and the big box store have hypnotized the public into believing cheaper is better.

But what does that underbidding actually cost?

Cheapest Price = The Wrong Solution

Often, to get within a price point when somebody else is already bidding a job, you may find yourself taking a wrong turn just to get the right price. We have all been there. We have all done it. We have sold the wrong product or cheaper product just to get the bid…just to get the sale.

Unfortunately, what happens in the long run is that the product breaks, the system does not work properly, the client yells at you, and repeat business is lost along with your bottom line. As custom integrators out there in the field, you know what works long term and what does not. There is a reason that HDMI matrix switchers are better than splitters or converters. As I tell my clients, “HDMI is a hairy beast, and you want to manage it the right way. The last thing you want it to pay for a system only to have no video input with a room full people. Do it once. Do it right.”

Bargain Price = Lost Profit

Technology, as I have preached before, is not a perfect science. Even after the system is completed and you turn over the remote, chances are you will need to go back for a glitch or user error. If you have cut your profit, you have painted yourself into a corner with no room to service the client.

Years ago I was going to purchase my first car, and I was thrilled. While having dinner with a friend, he warned me to ask for a fair price, but not the cheapest. He explained that if you take away too much commission from the salesperson, you would be sorry in the end. If he has a good experience, and you end up with an issue, you better believe he is going to want to help you. Maybe he’ll get you into service faster with a warranty repair or tell you to wait before you sign the dotted line for a better deal the next day.

Don’t you feel the same why when you sell a system? You know the clients as soon as they call—the ones that are going to complain about the price and the ones who will be fair. Who are you going to go the extra mile for? Who are you going to fit into the schedule during the busy weeks?

Shoddy System = Short-term Business

There is a reason why some products are cheaper than others. There is cheaper everything: cheaper cars, cheaper houses, and cheaper food, and yet, most people don’t go out and buy the cheapest house, car, or food. Is anyone craving bargain basement sushi? Do we buy the cheapest car when we are planning to drive cross-country? The lowest price comes with a cost, and that cost is an inferior product. Think you will be getting repeat business from the failed system for which the client paid thousands of dollars? What will they be telling their friends and colleges?

There will always be a company out there willing to do it cheaper. It’s probably the same one that does not have insurance or an address. They will win bids even though you are better and offering the right products and solutions for your customers. Five years down the road, they will learn from their mistakes (and lost dollars) or still be scooping up the lost souls looking for the cheap sushi.

Play the game for tomorrow and not today. Hold your head up high my fellow custom integrators and continue to sell “the right products and solution for your clients.” The future you, will be glad you did.

Heather L. Sidorowicz is the president of Southtown Audio Video in Hamburg, NY.