There are a ton of contractors and hardwood floor installers out there — competing in this landscape is tough. Unfortunately, it’s sometimes even made even more difficult by those installers who are able to undercut your prices and win more bids than you do every time. It’s a tale that we frequently hear from contractors around the country.
Sometimes it’s because their products or their actual work is much lower quality than yours, or they pay their staff less than you do.
There will always be companies out there who undercut everyone else. And it’s because they compete on price, not quality.
It’s disheartening to lose bids to people who price you out, but you don’t have to resort to the same undercutting tactics that they use.
What can you do to stay in the game even after getting severely priced out of a bid?
Once contractor recently turned to the users of the Contractor Talk forum for advice after being undercut by huge margins by a competitor. One user offered the following perspective:
“The “Winner” in this scenario undersold you by over 30%. My profit margins on a job are between 5-10%, assuming it’s the same in your business…his company is making no profit, which means he’s working for wages and most likely doesn’t have the burden of taxes/insurance/license/etc.”
Here are some words of encouragement from another user who says that those undercutting installer usually scare off the kinds of customers you want to work with:
“Believe it or not, there are a lot of people out there who want to deal with contractors who are professionals. These people do not want to deal with an average contractor or less. They want high quality work and they know it isn’t cheap. So low to even middle priced bids scare them off. It’s a red flag to this type of client. They know quality work cannot be done for little money.”
There are plenty of contractors out there who will always underbid you. But what matters is the quality of the work that you do and the relationship you build with your clients. That will keep your business going for the long haul.
And even if you get priced out of one bid, you can keep reaching out to new prospects to continue filling up your pipeline. Click here to read our tips for contractors looking for more work.
Have you ever had someone undercut your price so severely, you almost couldn’t believe they were making money on the job? How do you build good relationships with your customers and potential customers? Leave your thoughts in the comments below.