Beating the low-cost competitor

According to glassblog contributor Rod Van Buskirk, there are a few contract glaziers in every market that don't follow the rules. In an effort to cut costs, they might install improper product, underpay their employees, or disregard their union expenses. And with so many building owners focused on the bottom line, these companies sometimes win the job over their honest, quality, possibly higher-priced competitors.

Apparently, this is also true in the fabrication side of the business, where 48 percent of this year's Top Glass Fabricators said competing against low-quality companies would be their biggest challenge in 2013.

So how do you, as a high quality company, compete? How do you set yourself apart from competitors that rely on cutting corners to guarantee the lowest bid? And how does the extra effort affect your margins? As an industry, we're all looking for solutions to this problem. What is yours? 

Chase is editorial director of Glass Magazine. Write her at jchase@glass.org.

Comments

We have faced this issue for 3 years now and keep losing business to these guys, but instead of failing and going away as we felt sure would happen, they continue to win bids. Even in the face of poor quality and blown schedules they get contracted. With the knowledge that they are 15% below the competition and failing by most standards on current work they get the contract.
This activity used to be limited to a certain size job or type of job, but now they seem to be bidding it all and winning it all at or below cost. This baffles us and we don't have an answer yet. The old philosophies of ‘they are sure to run out of money sooner than later’ or ‘surely the general contractors will get fed up with service or product (or both) and not allow them to bid’ have not panned out at all.
Our only defense is to quit bidding the jobs these guys are bidding and focus only on the contractors that don’t use them. This saves wasted time and resources, sends a message that we are no longer interested in being a bidding service, and builds stronger relationships with fewer contractors; fewer contractors, yes……so I guess we are betting on quality over quantity.

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Hello glass magazine

If I may... after 45 years in the business as a provider of glazing products, I've learned there are always a minority of very successful companies that, year after year, take good care - and treat their employees, their vendors AND their customers fairly. And typically, good vendors and customers gravitate to these successful, quality glazing contractors. This recipe evolves into strong partnerships between these parties that get them all through the tough times; it will build meaningful, long lasting relationships and a strong foundation for future business for many years.

How do these special companies do this in an economy where cost is such a dominating mindset? Quality companies survive during lousy economic times because of their great Selling Skills for the benefits they provide their customers. This includes all the meaningful points before and after the sale: quality, workmanship, on time, visually appealing, and it works as well or better than expected.

My advice is to LEARN to better communicate how your products and services benefit your customer, how it saves them money, how you are going to provide all the extra things to insure the system or product doesn't leak and lasts through its life expentancy, that they are of high quality and will be visually appealing, etc.

This is MOST IMPORTANT: ALL customers appreciate quality products and installations; QUALITY CUSTOMERS, however, really need and want to hear justification for spending 5% - 25% more for the job than if they bought it from the cheap guy. Without this justification, the cheap guy wins! Think of the times you may have visited Lexus, Mercedes, Porsche, BMW, or Audi dealerships; have you EVER heard them talk about how cheap they are?... and they all make money.

COSTS ARE RISING in materials, insurance, fuel, benefits, and high quality employees needed to do a good job; we must rise to the challenge of doing a better job of SELLING our company's products and services, and not the price!

Well said!

Lower priced (cheaper) competition is what makes the business world go round, it's FREE ENTERPRISE regardless of the product or services. It should also be kept in mind if it wasn't for poor quality it would be harder to recognize good quality. There is now and in my opinion will always be a market that accepts low quality. Compare a tool from Walmart to one from Sears. You pay about half and you know it will not last, yet people do it everyday. After 35 years as a business owner I've come to understand it will never change. Think about the variables in overhead like union compared to a merit shop, a new building fully tricked out compared to a property inherited with no mortgage, a poor benefit package compared to solid all inclusive package etc.etc. These are the things that can let the low guy make a living to whatever comfort level he or she may have and not go broke. Personally I try to not concern or compare myself with the competition and spend my efforts in trying to insure we are providing the best quality available, utilizing the best people at what we feel is a competitive price and fortunitly there are costumers who beleive in that.Keep in mind there are jsut as many Kia's sold as Mecedes Benz
Brian Hale
2-28-13

Quality is certainly in the eye of the beholder. Try to tell a frameless shower door customer, you can beat the other guy's price as long as they don't mind a few imperfections or a small leak down the road. How about underbidding a storefront and explaining you don't need to take time to put in sill pan or seal it properly. The customer won't have to worry about mold or water damage, maybe for a couple years. Codes and safety glass? That's for sissys, and besides if you don't break it you won't get hurt. How's that sales technique working out for you? If somebody can deliver a quality product at a better price and still make a profit, I want to know how. Then I'll find a way to do it better. That's healthy competition and it's good for everybody.

Rid yourself of Unions somehow!!!

Architechs and building code inspectors need to do their jobs.
Jobs are awarded per plans, specs, and approved shop drawings.
GC's sometimes look the other way or don't know what to look for.They got the job by being the lowest bid and do not want to rain on their own parade.Again, if architects and code or building inspectors did their job, shody work practices would be rooted out. What good are plans, specs, and approved shop drawings if they are not followed or inforced ? As one owner I knew said, " They didn't pay for perfect " ! It will change when someone in the public gets hurt or killed and the lawsuits start flying ! Hey, what do you think insurance is for? I guess that works, as long as it's not someone in YOUR family that gets hurt!

We've had many bids this past year where the low bidder was below our HARD costs to do the job (not including liability insurance or other overhead costs). We use the same vendors and all have to pay prevailing wages (union scale). On one bid recently the GC told me they knew the low bidder left out the caulking (clearly defined in the bid package as part of our scope) but was awarding it to them anyway. I can't help but wonder in these situations if the GC awards the contract to the low bidder and then negotiates a change order for the left out work. Which makes the bidding process a joke and a waste of time.
The contractors that are still bidding work at "cost" are keeping the pricing down for all of us. Construction WILL go on and if contractors stopped bidding work for "free", the market would have to pay a fair price for the work to be done.