Reliable, professional vendors are essential partners in your quest to bring projects in on time and under budget. The right mix of quality work, responsiveness, and price is what you’re looking for, and once you make that contact it’s natural to continue the relationship. Like any good relationship, it’s good to step back and evaluate the benefits that each party is getting and your level of satisfaction with the service provider.
Yet, being immersed in the day-to-day operations of your business, it’s easy to continue with the status quo. In fact, you might not even recognize that you’re paying your vendors too much – especially if you haven’t tested your rates against the market in a while.
We’ve talked about the benefits of competitively bidding your projects before, and there’s even research that says triple bidding leads to an 8% reduction in the “bid low price.” So, what are the warning signs that you might be paying too much? Consider the following:
#1: Your Costs Haven’t Changed in Years
Labor and materials costs fluctuate with the market. As such, you should see your costs fluctuate from time to time. The same way that you’ve been riding with the status quo, so have your contractors and subs. They’re likely charging you out of habit.
#2: You Haven’t Checked the Market
In any industry, new vendors enter the landscape frequently. This is especially true in the real estate technology industry right now, as new, VC-backed players are emerging around every corner. If you haven’t solicited bids from anyone outside of your Rolodex in a few years, you may be missing out on better deals.
#3: Your Vendors Aren’t as Diligent as You
If your vendors aren’t working to drive down prices with their subcontractors and suppliers, they should be. You should expect them to be just as diligent as you are in ongoing efforts to save, and you see your rates reflect those changes.
#4: You’re their Biggest Client
When your company makes up a large portion of a vendor’s business, they can easily become overly dependent on you. This dependency can cause them to charge higher prices than a vendor with a larger book of business.
#5: You Haven’t Asked
Have you asked your vendor to reevaluate your pricing recently? If not, you could be missing an opportunity to save. At the same time, you’re strengthening the relationship, as the vendor will likely appreciate the ability to continue earning your business.
Make triple-bidding a habit
Sure, you value your relationship with your vendor and you don’t want the hassle of beginning a new partnership. And, they’re professional and reliable! But you can’t sit on the same price structure for those reasons alone.
Take the pulse of the market during your bidding process by routinely sending out multiple bids. When triple bidding is standard operating procedure, you may realize a substantial savings and fill your vendor bench with service providers and relationships you can trust.