An all too common occurrence in the electrical industry (and in the contracting world as a whole) is a client goes to tender for a job, gets a few quotes and goes for the cheapest one.
This makes sense to them as a customer; they see a contractor with the same qualifications and insurance as the others but charging at a cheaper rate – why wouldn’t they choose them?
Best case scenario: the job is done, and everything looks fine for a short while afterward. Worst case scenario, it comes to light that the job has some unforeseen problems that are too technical for the worker. Either way, the client has to pay them for the work they’ve done, but now have to fork out for someone new who is more experienced and understanding of the whole problem in order to fix it.
As a business, this scenario creates a high volume of our LED and lighting works. We are that second option, the more expensive, more efficient, (dare we say, better) option for LED installations. And it makes us wonder:
“Why weren’t we called out first?”
So, do we need to lower our prices to win this initial lighting work and avoid being the backup option? Surely if that is the problem, then that is the clear solution?
However, lowering our prices won’t solve anything, and will instead create two extra problems. Primarily, it will be counter-intuitive to us as a company and what we know we are worth within the lighting industry. More critically though, it will add to the increasing industry-wide “race to the bottom” as a means of winning work.
The Race to the Bottom
It’s a fact in any industry with independent traders that there will always be someone out there willing to undercut the competition to win work. It’s happened to the best of us, you need the work so charging a little less to get your foot in the door seems like a tempting offer, but I’m sure many who have come out of the other side of that financially have realised a few things:
Charging less than what is needed for the job will put both the trader and the customer out of pocket as the additional costs sooner or later accrue onto the final bill.
Do this for long enough and you run a risk of losing work and not getting enough to cover the work that you do win, eventually going bust.
The fact is, when we’re called out on an LED job – whether we’re the primary choice, or we’re cleaning up after someone else, we know that people are paying us for our experience in the LED and lighting industry and our growing list of certifications and accreditations.
Experience vs. Qualifications
Unfortunately, there is a clear gap in expectation between the tradespeople and the customer base in regard to what a job should cost.
You often hear tales of clients asking how a contractor completed a job in as little as half an hour. What isn’t considered on their part is how the contractor has trained for the past ten years and has got insurance up to their eyeballs to be able to do so.
In the electrical world especially, there are plenty of courses out there that can “qualify” you in 12 weeks’ time, but experience counts for much more in that scenario.
If you’re up against someone with the same qualifications but an extra ten years of experience, then they’re obviously going to charge more because they been in the game longer.
But the customer expectation is that you should be charging the same as the guy who put himself through college 12 weeks ago to get the same certificate as you. It’s an unfair gauge of cost and essentially comes down to comparing apples with oranges.
This isn’t to say that I don’t support those who want to follow a career in the industry and have put themselves through a course to do so but with something like electrical and lighting work if you get it wrong due to your lack of real-life experience, that’s a matter of life and death. That isn’t a bad paint job on a wall, electricity can kill.
You may have a certificate in electrical or lighting training but the kind of work that you do – and with whom, be it alongside a more competent electrician – should really be determined by the amount of experience you have throughout the years, not by your name on a piece of paper.
Experience and qualifications have to go hand in hand when considering who to take on your work.
Experience counts for everything but traders will still go out of their way to get qualifications and accreditations because it is a tangible way of proving that they have put in the time and effort, they are dedicated to their craft and are willing to spend their own money with an assessment each year to prove so, which then becomes another part of the quote.
On the matter of pricing
I believe if there was no competition on price at all, and instead more of a standard rate used across the industry, then we could keep that price strong for a long time because as soon as someone’s price is undercut, they will do the same and the cycle continues right to the bottom and the true value of that work is ill-represented as the standard rate when it really isn’t.
We sometimes get requests to reduce our lighting and LED prices and I’ve said the same things to these people for the past six years:
“If I could do our price any cheaper, then that is what your quote would’ve been”.
What I don’t like to do is give a quote knowing that I could’ve 20% cheaper then offend you later on by revealing that I could’ve done it at that price all along. We’re really careful that our quote is our quote and that there’s no room for a discount.
I think it’s just a matter of being open-minded to more forward-thinking. If you really look at all the work out there, you’ll see that it’s a huge market!
Like we touched on in our last post, it’s also worth working with other companies and becoming a subcontractor to your competitors instead of undercutting their costs. This keeps the industry strong and the relationships within it alive, and allows good workers to work together; slowing down that race to the bottom.
Solutions from a lighting expert and contracting veteran
This isn’t to say that you should just always go for the highest price. It’s still worth getting a few good quotes whenever you put in for a job, but cost should sit to the side before you check up on a few smaller, equally important things first:
Firstly, when you’re initially looking for a trader make sure you use verified websites to check they’ve got the credentials you’d want from them to work on your property. You could also go online and check that they’re registered with a governing body.
Now that you’ve found your verified, certified trader, I’d then recommend looking at how their quote is presented. If it is professional-looking, has correct spelling and grammar, and is calculated correctly then this a good sign.
If they have a website that displays their credentials within the industry and explains a bit more about them, then they’re another step towards consideration.
The most relevant example I can give was when I tendered for an LED job, the competitor was cheap, very cheap and he wrote the words “lecky bill” instead of “electricity bill”. I’ll admit it filled me with dread as to what he’d be like onsite.
This isn’t to ignore those who struggle with spelling or have dyslexia but if that’s the case and they haven’t used spellcheck then what are they not going to be bothered to do onsite?
Is the contractor’s van an absolute mess when they arrive, or do they take pride in it? If they take pride in something like their van, they’re more likely to feel the same about their work and will keep the site as tidy as possible and clean up after themselves.
Are they going to come into your house with shoes on or are they going to ask if you would prefer them off?
Are they going to respect your boundaries and sense of working hours in that you don’t want them working too early or late?
These people won’t necessarily have the cheapest price, but they will definitely give you the best experience of having a tradesperson in your home or workplace.
It comes down to customer confidence in the contractor. These smaller things are what their quote is worth. They’ve understood where they’ve priced themselves in the market and they understand what they’re good at.
In the end, the consumer dictates who become successful or not because those who are good, considerate workers will get repeat business and recommendations much more than the inexperienced, cheaper ones.
There will always be room for cheap labour. There will always be someone who for one reason or another will choose the cheaper option, but as long as they come to know why that worker was cheaper in the first place, then maybe that isn’t an entirely bad thing in the long term.
Ready to take the step into the future of lighting? Contact Cube Lighting & Design here to see if you qualify for free LED lighting!
Want to keep reading? Check out our last blog post here: Five reasons why you need LED Lighting for your Business