The Perils of Hiring the Lowest Bidder
Seems like a no-brainer, doesn't it?
After all, you're saving gobs of cash, so what could go wrong? It just means you're a smart businessman, right? RIGHT?!
After all, "Negotiate, negotiate, negotiate" has been taught from birth. "Never accept the first price." yada, yada, yada. Unless, of course, this strategy could actually cost you your reputation, your property, your savings, your investment, and your future.
Tattoo this onto your brains... "Lowest bidder" means "Lowest quality." "Lowest quality" means "Triple investment."
Wait... what?
You heard me. Choosing the lowest bidder, on average, costs up to 3x the cost of the original job in the long run, due to unacceptable deliverables, missed deadlines, premature replacement costs, dings to your reputation and guest satisfaction/reviews, and do-over costs.
There is a reason why vendors who provide quality products charge a higher price. And it's not so that they can buy a new Porche every year at your expense (even though that's really what you think they do).
They charge more because they know what their products are worth. Products and services that are priced fairly are typically better constructed, more durable, and last longer. Those who refuse to compromise on quality and have to charge more for it know that their products will provide greater guest (and management) satisfaction than the cheap low-bidders. They're a better investment... and that's exactly what they are. An investment.
Using the example of grounds maintenance, this writer underscores what I said above;
"With a low-quality service provider, you might not see the effects immediately, but a few years down the line you will start to see the damage done from poor service and neglect. Your turf becomes diseased, your shrubs start dying off, and the roots of your trees are now girdling. This will cause issues you need to rehabilitate. Maintenance vs rehabilitation is something that should be considered when choosing your landscaper. You might have saved 5-20% initially with going with the low bid, but you could be spending triple that trying to rehabilitate your landscape." ("The True 'Cost' of Going With the Low Bidder," JC Grounds Management)
There is an old English saying that describes this mindset... "Penny-wise and pound foolish." Another valuable one is "you get what you pay for."
Hotel photography is another area that I'm particularly familiar with. I regularly hear from sincere, yet uninformed potential clients who claim they received a "lower bid" and that they are going "with that one." To which I just smile. Why? Because if history has taught me anything, it's that they'll be back. Tail between their legs, sheepish asking if we'll come out and photograph their property. The conversation is so predictable that I've practically memorized it.
Owner: "Can you come out and photograph our property as soon as possible?"
Me: "I thought you hired someone else to photograph it"?
Owner: "Ummmmm... well... we did."
Me: "So why do you need it photographed again?"
Owner: "The flag rejected their images... said they couldn't accept them."
Me: "Oh, really? Why not?"
Owner: "They weren't compliant with their standards."
Me: "Did they show you examples of previous jobs? Did they give you references?"
Owner: "Their price was so good, that I couldn't pass it up."
Me: "So, how'd that work out for you?"
Owner: "Not very well. We'd like you to come out and do it right. You'll give us a big discount, though, because we've already paid for someone else to do it, right?"
Me: "Ummmm... no. You'll have to pay the regular price."
Owner: "But why? We already put out a lot of money to get this done... why can't you give us a break on your fee?"
I see you sitting there with your mouth open... oh, yes... this request happens ALL. THE. TIME.
Me: "Because you should have known better to accept the lowest bidder, and it's not our responsibility to pay for your bad business decisions."
Owner (resignedly): "OK, OK, when can you come out?"
At least 25% of our business comes from owners who accepted the low bidder only to discover the true costs of doing so. Many think that all hospitality photography consists of is pressing a button. They don't understand the years... decades... of experience that go into it, much less the cost of the equipment to do a professional job... or the amount of post-production work that goes into it. They honestly think that a wedding photographer, who's never photographed a hotel in his life, and do a job equivalent to an experienced, credentialed architectural photographer with 30 years of experience.
It kind of boggles the mind, actually.
After all, you're saving gobs of cash, so what could go wrong? It just means you're a smart businessman, right? RIGHT?!
After all, "Negotiate, negotiate, negotiate" has been taught from birth. "Never accept the first price." yada, yada, yada. Unless, of course, this strategy could actually cost you your reputation, your property, your savings, your investment, and your future.
Tattoo this onto your brains... "Lowest bidder" means "Lowest quality." "Lowest quality" means "Triple investment."
Wait... what?
You heard me. Choosing the lowest bidder, on average, costs up to 3x the cost of the original job in the long run, due to unacceptable deliverables, missed deadlines, premature replacement costs, dings to your reputation and guest satisfaction/reviews, and do-over costs.
There is a reason why vendors who provide quality products charge a higher price. And it's not so that they can buy a new Porche every year at your expense (even though that's really what you think they do).
They charge more because they know what their products are worth. Products and services that are priced fairly are typically better constructed, more durable, and last longer. Those who refuse to compromise on quality and have to charge more for it know that their products will provide greater guest (and management) satisfaction than the cheap low-bidders. They're a better investment... and that's exactly what they are. An investment.
Using the example of grounds maintenance, this writer underscores what I said above;
"With a low-quality service provider, you might not see the effects immediately, but a few years down the line you will start to see the damage done from poor service and neglect. Your turf becomes diseased, your shrubs start dying off, and the roots of your trees are now girdling. This will cause issues you need to rehabilitate. Maintenance vs rehabilitation is something that should be considered when choosing your landscaper. You might have saved 5-20% initially with going with the low bid, but you could be spending triple that trying to rehabilitate your landscape." ("The True 'Cost' of Going With the Low Bidder," JC Grounds Management)
There is an old English saying that describes this mindset... "Penny-wise and pound foolish." Another valuable one is "you get what you pay for."
Hotel photography is another area that I'm particularly familiar with. I regularly hear from sincere, yet uninformed potential clients who claim they received a "lower bid" and that they are going "with that one." To which I just smile. Why? Because if history has taught me anything, it's that they'll be back. Tail between their legs, sheepish asking if we'll come out and photograph their property. The conversation is so predictable that I've practically memorized it.
Owner: "Can you come out and photograph our property as soon as possible?"
Me: "I thought you hired someone else to photograph it"?
Owner: "Ummmmm... well... we did."
Me: "So why do you need it photographed again?"
Owner: "The flag rejected their images... said they couldn't accept them."
Me: "Oh, really? Why not?"
Owner: "They weren't compliant with their standards."
Me: "Did they show you examples of previous jobs? Did they give you references?"
Owner: "Their price was so good, that I couldn't pass it up."
Me: "So, how'd that work out for you?"
Owner: "Not very well. We'd like you to come out and do it right. You'll give us a big discount, though, because we've already paid for someone else to do it, right?"
Me: "Ummmm... no. You'll have to pay the regular price."
Owner: "But why? We already put out a lot of money to get this done... why can't you give us a break on your fee?"
I see you sitting there with your mouth open... oh, yes... this request happens ALL. THE. TIME.
Me: "Because you should have known better to accept the lowest bidder, and it's not our responsibility to pay for your bad business decisions."
Owner (resignedly): "OK, OK, when can you come out?"
At least 25% of our business comes from owners who accepted the low bidder only to discover the true costs of doing so. Many think that all hospitality photography consists of is pressing a button. They don't understand the years... decades... of experience that go into it, much less the cost of the equipment to do a professional job... or the amount of post-production work that goes into it. They honestly think that a wedding photographer, who's never photographed a hotel in his life, and do a job equivalent to an experienced, credentialed architectural photographer with 30 years of experience.
It kind of boggles the mind, actually.
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