A reader writes: “I recently participated in a bid opportunity where the prospect gave us a maximum price they would pay and invited us to bid on it with whatever number so long as it comes in below the maximum. I didn’t get the bid.”

This is becoming more common for some types of accounts. The idea is that the prospective customer has calculated what they believe it will cost to clean the building/area based on a set of cleaning standards. They then look for a BSC (Building Service Contractor) who can meet or beat their number. Any savings makes their budget look better. If you can determine what system they used to calculate their numbers you can usually find ways of increasing your productivity and thereby decreasing your overall costs.

Remember that the key to the cost of a contract is task x frequency x BLR (burdened labor rate) with the addition of supervision, equipment, tools, supplies, chemicals, insurance and other overhead. Once you calculate that number, you may want to add in profit margin, if appropriate. I have heard of proposals when no one could match their maximum price and the prospect had to review their numbers and specifications to determine why this had happened. I am also aware that sometimes they are fishing to see what kind of response they will get.

I am always amused when a prospective customer will state categorically that my price is too high and I ask how they arrived at that conclusion. They oftentimes stammer or tell me that they do not have to share that information. I agree with them and then share how I used my time standards, wage rates and other factors to arrive at my number. I then suggest we review the specifications to identify areas that could be adjusted without impact on health or appearance.

Your comments and questions are important. I hope to hear from you soon. Until then, keep it clean...

Mickey Crowe has been involved in the industry for over 35 years. He is a trainer, speaker and consultant. You can reach Mickey at 678-314-2171 or CTCG50@comcast.net