Last May an excellent small EC was low bidder on a school addition. As I have aided him previously, he requested that I review his supplier quotes. All were in order except for the FA system addition. The price for the addition was numbing, >$12,000.00. I contacted the architect about a new system and was given the O.K. Completely new system by alternate manufacturer <$9,000.00. The architect told me that this overpricing is quite common with additions to existing systems. His specs now provide the alternate of replacement systems. This past Friday we had lunch and he told me that since changing his specs prices have been more in-line for system additions. Is this over pricing common or just in IL? Sam
Common everywhere. Order a MDP of any manufacturer with the circuit breakers needed. Then check the price against adding circuit breakers to an existing MDP. The additional CB's will be substantially higher than the original ones.
I guess it's the equivalent of a change order for the manufacturer.
[This message has been edited by mahlere (edited 03-19-2006).]
Re: System Overcharging?#63506 03/19/0612:20 PM03/19/0612:20 PM
There's a need for you to understand the "facts of life," when it comes to pricing.
Many companies devote a tremendous amout of effort to "stacking the deck," so they don't have to deal with bothersome competition. Some of these strategies include: - Getting an engineer, or architect, to write the specs in such a manner that only one particular product can be used; - Limiting access to your product to "certified" installers; - Distributing your product into "protected territories" so that only one of your reps will be able to do the job; and, - Designing your equipment so that is can only use your parts.
When an inquiry comes in, there is no need to worry about competition.....so you can charge the full list price. Naturally, these schemes all collapse if technology changes things, if other brands are allowed into the job, or if things become 'standardised.' When it is discovered that someone found a way to introduce a competitor into the mix- well, you can imagine the howl that goes up. Polished "Wormtongues" appear, crying 'listing violation' or 'not to specification' or magnifying some tiny difference into titanic proportions.
Another factor that enters the mix is the ability, and willingness, of the customer to pay top-dollar. Governmental customers are favored, as not only do they (through taxation) have a bottomless bank account- their political processes make choosing anything but "the best" subject to endless second-guessing.
John Ruskin said something to the effect that 'there is nothing that cannot be made woorse, or cheaper....and the customer who loks at price alone is that man's lawful prey.' In other words, price is only part of the "value" equation. Two other, major, parts of business are quality and service. Do not overlook these in your business plan!
Re: System Overcharging?#63507 03/19/0601:32 PM03/19/0601:32 PM
Reno, I actually went on a week-long course for Design Engineers, which, let us dub, 'How To Make Your Products Utter Crapola And Save Money', in the eighties. The basic idea went like this: Ford make 1 million cars a year. Save a dollar on each car = CEO buys a Floating Gin-Palace with his Stock Options. They had a list of fabulous examples. My favorite was their idea to replace expensive scroll-engines for tuning guitars and violins with wedges of plastic. You jammed several pieces of this cheap junk into the strings behind the bridge instead! My [ sarcastic joke ] idea of nailing the strings down with fencing staples was met with guarded approval; they "liked the way I was thinking!"
Wood work but can't!
Re: System Overcharging?#63510 03/20/0612:07 AM03/20/0612:07 AM
I have seen some of our project specifications for special products in bids go out that were simply downloaded from a manufacturer's website (I was able to later download the same one's) - although our engineers denied it. They also didn't read them very well in order to remove the brand specific references. Just download, copy & paste.
They also one time recently spec'd smoke detectors to be installed on the underside of a new outdoor canopy and tied into the adjacent buildings FA system. Go figure.
There are 10 types of people. Those who know binary, and those who don't.
Re: System Overcharging?#63511 03/20/0603:29 AM03/20/0603:29 AM
I've struck a similar thing with security systems. With one school that needed more zones added, the company I wanted to use refused to even give a quote because they had worked on it once before and didn't want to touch it ever again.