Leave Bids and Contracts 'Open Ended'Contributed by Karen and Wally Bolger of Country Asphalt Maintenance and Sweeping:
Our Tip has to do with submitting a bid and/or contract for services. We include clauses designed to make sure prospects understand that what we're providing is a 'best guess estimate' of both the amount of service they will require and the cost for providing it. In other words, we leave the door open for discussion and negotiation of either the cost or the scope of services.
We also try to make sure that competitor's bids are for the same level of services, i.e., apples get compared with apples. We have found that when another company is offering a lower total cost, it usually will also be offering a smaller service package. To cover this, we include the following clause on our bids: 'We would be happy to discuss with you any changes in scope or specifications.' If we aren't awarded the bid, we make sure in our follow-up that the prospect understands why that sentence was included.
We have now started using another statement, due to the recent large and unforseen upswing in fuel expenses and dumping charges in our area. These have been sizeable enough to mean the difference between profit and loss on some of our accounts, and up until now these types of costs have been reviewable only on a yearly basis. Other likely areas where an unexpected increase could take place include state or government fees, water rates or some type of environmental surcharge. The new clause reads: 'Bid is based upon current costs, and is subject to review and adjustment in the event of unforseen inflation in the costs of doing business.' Now when we have a new cost, such as a fuels hike, we will be able to go to our clients and negotiate professionally to pass it along to them.
Editor's Note: By making further negotiation available at a later date, tied to a verifiable business cost increase, you are actually ensuring that your clients get the best possible price at all times. Most clients will understand that your only other option is to build an extra cushion, perhaps unneeded, into all your bids.
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