Unless you can do everything yourself, you will have to hire contractors to perform certain services at your storage facility. But are you paying too much for them? In this Self-Storage University podcast we’re going to explore some strategies to get you the lowest cost from vendors.
Episode 134: How To Get The Lowest Vendor Prices Transcript
You probably don't know how to do everything. You're probably not a licensed electrician, you're probably not a skilled carpenter, you're probably not good at working with concrete. But there was one skill that you should be good at, and that's how to get the lowest vendor prices. This is Frank Rolfe, the Self Storage University podcast. We're going to talk about how to get the lowest price when you're trying to get something done that you cannot do yourself. Now let's start off with the simple fact that you've got to get on any project, I don't care what it is a definition of what the project is all about. Are we trying to fix potholes? You can't just say, I'm going to fix some potholes. Which potholes? Where are they? How big are they? We've got to get everything down to a very finite thing. It can't just be a broad statement. It has to be a finite item. And now that we have a finite item, we can compare apples to apples with. We have to go out and get at least two bids. I know it sounds like a pain in the rear. I know that in a post Covid world it's always harder to get bids, but you got to force yourself to go out there and make the calls or have your manager make the calls and get at least two written bids for any project.
And those two written bids again, have to be apples to apples. They have to include parts, labor, the whole thing, all bills paid. So we have to start with that piece. If you want to get the lowest vendor pricing, any other option is not going to work. So that's the start of our little board game here of how to get low, lowest vendor prices. I need two written bids, parts and labor completely done on a very specific project. And then what I do is I go to each of those two bidders and I tell them, look, well, you're not the lowest bidder, but I like you. And I wonder, can you, can you go even lower? Could you come in lower than the other bidder? Now, of course, one of those two people you run this by, it's not really true because you have a high bid and a low bid if you have two bids. But the bidders don't know that. This is a common rule of how everyone really does it in the real world. Based on everything from city, government, military, etc. An initial bid is considered not the best and final price.
It's a number they want to throw out, knowing it is subject to renegotiation. So you have to renegotiate those bids down. One of the best ways to do it is to say, look, you're not the lowest bidder, or you're not as low as I want you or need you to be, but could you go lower? And you're going to find that in most cases, if you simply ask for the bidder to go lower, they in fact will go lower because they always assumed when they made the price to begin with that you were going to come back and ask them to do that. So now what do I do? Now I have two bids, one clearly lower than the other. Best and final at this point. And so I'm going to go ahead and then go with the contract of the lowest bid, assuming they're both of the same quality. Sometimes you go with the higher bid, slightly higher bid, because that person is thought to have better ability. But assuming you have contractors on a very tangible commodity like tree removal, then that's not really the case. Someone does not remove a tree better than somebody else.
Assuming they both have insurance, you typically will go with the low price. But now, here's where most people get it wrong. I mean, that, that, that sounds like that would be the end of the movie, but that's not the end of the movie. If you want to get really low vendor prices, you typically want to hit the vendor up one more time to see if they can go even lower when they're done with the job. Point out the errors and what they did. They always have some. I've never seen anyone do something perfect per the contract and then see if they can take a little bit more off because they didn't quite do it like you hoped that they would. And sometimes they know they didn't do it perfectly. They know that the asphalt paving didn't come out exactly as they wanted. They know the paint job wasn't exactly to the, high standards that they had perhaps promised you. And so then again, they will typically come off some more. But here's a bigger issue that most people don't understand. They'll do what we just described on the very first bidding process, but they never do it again.
After that first bidding process. They say to themselves, oh, yes, this guy right here, Roger Smith. He is our new official licensed electrician on every job we have thereafter. I'm only going to call Roger Smith. That's the worst decision you can possibly make because Roger's going to realize that you're no longer doing the bidding process. He's going to realize you're no longer pushing back on his pricing.
So his pricing is going to go from reasonable to full retail, sometimes even beyond because he knows you're kind of a sucker is the bottom line. Contractors, when you do not use a bidding process, seem to always go bad. That's one reason that in most city, state and federal governments they have to work off a bidding process, an open bidding process. They're not allowed to say, oh yeah, you were the low bidder on that last road repair job, so you get all future road repair jobs. Because we know inherently that stupid. And on the city, county and federal perspective, since they know it's stupid, they don't want you to repeat it. Even though often they can be pretty. Stupid in what they do when it comes to vendors. They do kind of have that all figured out. So you got to go in there as much as you don't want to. Nobody likes the bidding process. It's hard to get multiple bids in a post Covid America.
You have to force yourself to do it. Because if you don't force yourself to do it then you might got the lowest price that first time out. But going forward, you are going to be taken advantage of over and over and over again. This is Frank Rolfe with the Self Storage University podcast. Hope you enjoyed this. Talk to you again soon.