We are all familiar with retail companies offering price matching, that is, “if you see it cheaper elsewhere we’ll match it or do it for a penny less”.
Retailers are selling a commodity so whether it’s a bag of sugar or a new PC they have a product specification to validate that they are matching like for like.
It’s natural that this practice is sometimes pursued when seeking tenders from companies.
However if you are on the receiving end of a price match request for your mechanical estimating tender , or as we like to say, “Dutch Auction” its imperative to the financial well being of your company that you know it’s like for like.
When you’re told someone else’s price is lower, you shouldn’t match or beat on price alone, you need to know it’s genuine like for like.
The electrical estimating tender you submit will usually be based on tender drawings and specifications and schedules. So it should be like for like, but don’t assume this is the case , because a few words accompanying a competitors tender can make a massive difference in price, and your relying on the receiver understanding the significance of the qualifications.
For example, suppose there wasn’t a luminaire schedule or radiator schedule, and one contractor chose to include a budget, the other chose to exclude it altogether until the information became available, and you match a lower tender value without knowing this. It could be commercial suicide, because your unknowingly offering to lower your price for the same specification.
The solution is to prepare your electrical estimate in detail, obtain quotations from specified suppliers and subcontractors, material prices should be up-to-date and apply you agreed discount terms, this will give you confidence that your estimating tender is right. If you want to match or beat a lower price ask for the summary and any qualification that go with it. Then make an informed decision or price match on the same qualified basis.
The Dutch Auction can ensue after you do lower your tender, when the competitor beat your lower value and so it goes on until one party says no more.