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Potential new business: Lowball quotes

In your short piece about the move, Joel writes:

"As a client, the best way to use a lowball bid is to get the contractor you really want to lower their bid."

I wonder if there is a business opportunity here.

Based on what Joel is saying, it seems that for this type of work, one should always get a few quotes, and if possible make sure one is a lowball. You then use the lowball to negotiate with the one you want.

Now, what if you can't get a lowball quote? Well, maybe someone could start a business and give lowball quotes, in return for a fee, so that someone can then negotiate a reduction with a vendor.

Clarification: I am NOT suggesting that Joel agrees or endorses this.

Roberto Benincasa
Tuesday, September 23, 2003

If you're gonna go through all this trouble, you might as well pretend that you got a lower quote ... It's not like the contractor is in a position to ask for proof.

And about the "get a few quotes" comment, I don't think anyone sensible would go in a large budget project without consulting as many serious contractors as possible.

Renaud Martinon
Tuesday, September 23, 2003

Does an imaginary bid really place you in any better position than you started with?

Lou
Tuesday, September 23, 2003

Certainly, an imaginary bid can be helpful in knocking a few percent off of your preferred bidder's bid.

It's not sensible to use the technique to force your suppliers to cut their own throats though. Nobody wins then.

Steve Jones (UK)
Tuesday, September 23, 2003

In my 8 years of experience working with an electrical contractor, the low bid approach never works the way the customer wants it.

If you get a contractor that knows what he's doing, knows how to turn a dime so to speak, then he is already operating with a slim margin & he will likely tell you thanks, but no thanks.

So you either end up with a less than ethical contractor that WILL make up the percentage difference with cost overruns, or you get somebody that doesn't know what the heck they're doing.

Cutting off your nose to spite your face I think they call it.


Tuesday, September 23, 2003

"If you get a contractor that knows what he's doing, knows how to turn a dime so to speak, then he is already operating with a slim margin & he will likely tell you thanks, but no thanks."

Operating on a slim margin? I guess it depends upon the trade. I've been looking into getting a furnace replaced and have discovered that

-Regional HVAC workers are in a high degree of collusion. i.e. You keep your margins high and I'll keep mine high.

-They charge 100% markup on whole furnaces, and often more on parts. Add to this an hourly fee that makes many software developers look cheap.

I can try getting as many quotes as I want, to strangely discover the same high price is pretty universal (because of the aforementioned collusion). Add special dealer arrangements between vendors and furnace makers to ensure that no high efficience\low cost operations upset this profit wagon, and you have the makings of a massive rip of an industry.

Dennis Forbes
Tuesday, September 23, 2003

Price always looks high to the consumer that is unaware of the overhead, doesn't it?

Sounds like maybe you should get an HVAC license?


Tuesday, September 23, 2003

Here in Lake Tahoe contractor prices are sky high.  Probably on par with NYC.  Contractors can easily make as much, if not more, than software developers.  Getting a contracting license isn't a bad deal.  On top of it contractors in tahoe are notoriously late and lazy. 

I'm having a remodel done.  This is strange, but it was way cheaper to hire a crew from 100 miles away (Sacramento), and put them up in motel for 3 weeks.  Plus I got my work done professionally and in a timely manner.  I almost feel like I'm outsourcing in my own country.  Just to a cheaper region. 

If I couldn't earn a dime in software anymore, I'd consider something in construction.  Go back and get a MBA in construction management or something. 

christopher baus
Tuesday, September 23, 2003

Heh.  My old boss in the real estate software business had an air conditioning shop...  he moved from doing that *to* the software business.

Of course, that was the early eighties, and the dawn of the microcomputer boom... they weren't even universally called "PC's" yet, and "IBM-compatible" was still an up-and-coming buzzword.

Phillip J. Eby
Tuesday, September 23, 2003

Hey guys,

My dad was a housing contractor.  It was tough work.  Boom & Bust roller-coaster.  You think IT is cyclical, try construction.  You think programmers are hard to manage/work with?  Try people that can barely speak english or show up drunk or don't even bother showing up.  Try having employees that think it's OK to steal your equipment since you must be making big bucks (your name is on the sign in the yard, after all).  Try making a buck when your subs are squeezing you and the homeowners are squeezing you and the bank is turning up the heat.  I hung a lot of drywall to put myself through college,and I sure as hell don't miss it.  My dad always tried to steer me to become a doctor, lawyer, accountant, or engineer.  Wound up in programming.  Guess where I'm going to try to steer my daughter? 8)

David Summer
Tuesday, September 23, 2003

You have just GOT to know that all our customers think the same thing about us - "how freaking hard can it be to write a scheduling application?"

I suspect HVAC installations are exceptionally high-risk.
Normal job, as expected, quick n' dirty - nice profit.

But my cousin had her A/C replaced. Decent price, seemed a little high. But it wasn't high when the contractor discovered that the A/C closet was built around the unit, and all the piping (that had to be pulled) was bolted to every joist (normally they're just run through the ceiling - one yank and they're out).

The job *should* have been four guys, four hours. It was eight guys, twelve hours. They lost money on that one big time.

Philo

Philo
Tuesday, September 23, 2003

Off topic - Isn't Open Source software the "low bid" in dealing with software vendors now?

m
Tuesday, September 23, 2003

> Isn't Open Source software the "low bid" in dealing with software vendors now?

Funnily enough, it isn't. Have you seen what IBM charges? Which is interesting because eventually the politicians clamouring for open source are going to have to explain why it's not actually cheaper after.


Tuesday, September 23, 2003

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