Topic
High Pricing Due to Desperation or Reduced Competition?
Topic posted October 30, 2011 by FStephenMasek
, last edited January 19, 2012
, last edited January 19, 2012572 Views, 4 Comments
Title:
High Pricing Due to Desperation or Reduced Competition?
Content:
Has anyone else noticed that some consulting companies are seeking high prices? Sometimes, the "locals" are high enough for us to travel to other states and still undercut them. I've recently spoken with someboby at another consulting company who is finding the same thing. Do you think this is due to reduced competition, or desperation to make money on an occasional project?
Comment
Probably they are just busy and clients are looking for quick turn arounds. Clients are willing to pay more for quick turns if that's what it takes to make deal happen.
At a company I used to work for, we had someone call us on Friday because they needed a Phase I done by Monday on a huge property consisting of several non-contiguous parcels. They offered $50,000, plus a $50,000 bonus if it got done on time. It got done on time.
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Desparation generally leads to low-balling, not high-balling--you would think. However. I think many firms are strategically right-sizing and outsourcing more and they may be high-balling some of their non-core services that they may be inclined to out-source to a contract field agent or subconsultant partner. I am getting some asbestos and lead work based on firms that are offering that service but no longer staffing it in house--but from outsourcing. One project I worked on was double-outsourced. Without giving away any competitive info, I would be interested in hearing more specifics pertaining to the market and service area.
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I have not noticed it but it sounds GREAT if real. We have been beaten down for so many years....some upside would be tremendous. And i would not complain......raise your prices.
But this kind of reminds me of a large financial company for which I regularly consult. They have about 4 other consultants on their list. Their format includes a lot of extra stuff like Asbestos, Lead Paint, etc. The projects would typically go for approximately $4000+ and that is where most of the consultants quote. One of the firms, however, consistently bids ridiculously low prices, i.e. $2300 or so. Yes, they get more of the work (not that much) but what for??? They obviously aren't making much more than minimum wage. The rest of us still get a portion of the projects and actually make a some money on ours. And I think this cut-rate, race to the bottom mentality simply serves to harm the whole consulting community.
BTW....the client has told me repeatedly does not really respect this consultant. He only keeps them on the list because of some internal pressure. And I think a lot of that disrespect is due to the fact that they are a cut-rate shop ...... a shop that checks the boxes with inexperienced personnel.
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It may well be that the $2,300 guys are not actually doing the work, and/or have non certified people. I've got some recent asbestos & lead survey reports from one such outfit in southern California which show no evidence that they had anyone certified do the work, no signatures, very few samples, no photos, and missing many other things required by regulations.
Your client might appreciate some help in getting rid of those low-ballers.
You can be efficient and have low overhead, so it is possible to offer top quality and top vale. My company has won many competitive bid contracts. The first one we won many years ago, the top bid was 15 times our price, yet we made good money and were quite happy to haev the contract.
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