How do you get the best price on your RFP? The list below provides 10 actionable tips that you can incorporate in the next RFP you put out. Some tips require more time than others. If you utilize at least a few, you will see benefits immediately.
RFP…. the old dreaded acronym for REQUEST FOR PROPOSAL. Developing an RFP can lead to stress, confusion, and frustration for both you and your service providers.
Ideally, you identify the problem or need for the facility and contact the vendor to come out and evaluate the predicament. The vendor will develop an intelligent, competitive, and final price to solve your problem. Sounds easy, right? As we all know, this is not always the case.
Hopefully, we can simplify and improve this tantalizing experience.
Tips for getting the best price:
1. Write the request. Seems relatively necessary and straightforward at times but the fact that you have chosen to take the time and write out an RFP or even a scope of what you are looking for shows the contractor of the vendor that you are serious about getting a price and ultimately getting the order filled or the project done. Contractors and vendor are typically skeptical folks at times and if they get a hint or whiff that they are wasting their time can ensure that you never get a callback or a price you need for management or the owner.
2. In communication, play up the ego. Let the contractor or vendor know that they are in a select group due to their reputation. Everybody likes to feel unique, even vendors. A good or exceptional contractor or commercial vendor can expect to close 15% to 25% close ratio (and that is if you are good, meaning right product or service and the salespeople know their stuff). So a majority of the time they lose deals as high is 80 to 90 percent depending on how good they and their product and or service may be. So, if you play up to their ego even a little bit, they come running and are appreciative. So definitely play this card to your advantage.
3. Provide the info that is most of the interest for your bidder: timeframes, payment terms, and the desire to move ahead with the project within a certain amount of time. Once they start feeling like they can get the job, they see themselves doing the job. It’s kind of like a pet store allowing a potential owner to take a puppy home for the weekend. Most of all, the contractors and vendors are small business owners, and they are acutely aware of things that waste their or their staff’s time. By providing clarity about the order or contract makes them feel again (as with tip #1) that this is a real live order and not you just kicking tires for the owner or management of the building, property or facility.
4. Ask for advice. Vendors appreciate when their expertise is acknowledged. By asking for their input, it makes them feel more involved. This will go a long way and helps them buy into the project. The sales folks for most service contractors or vendors will be very eager to show what they know and may provide some valuable free information. At the least, you can get some further insight into the company and how competent your representative and if you should be worried.
5. Define a timeframe for the price. Be as flexible as possible. Typically, two weeks is sufficient for most requests, but some proposals that are very technical can take longer. The time frame adds to the importance of your request. Most contractors and vendor are diligent, but it does happen when they get busy or vacations or time away from the office, or if they are just lazy or pursuing other deals, you may get lost in their quest. Whenever possible, try to give them less time than necessary to keep the pressure to get you the quote or proposal, if they need more time, you can always grant the request.
6. Make it clear, price is essential, but the quality and service matter in the selection. They will never know how much they actually will play apart. Vendors do like to hear that there is an appreciation for quality and service. This is a point that will keep the better vendors in the game. Even though they may not believe the comment on face value, they know there is that rare occasion that it is possible to win a project or order in part of the quality and expertise they bring to the table. If you stress that the lowest number gets it, some contractors and vendors may opt-out and leave you short on the number of bidders needed.
7. Inquire about the company. Like most of us, vendors like talking about their favorite topic… themselves. Simple questions about their company (e.g., the size of the company, how busy they are, who they are currently working with) shows that you are interested in them. Their answers can also provide you with information that could come in handy later on. This also helps you gain insights that can be used later on if you take things up a notch in negotiating with the other bidder you are considering. Like the motto goes “information is power” and you will be getting this info from the horse’s mouth.
8. Let them know that the relationship may go beyond this request for future orders (the ole carrot move). Now for folks that have been in the game for a while, they may roll their eyes at this because they are jaded. It does help when possible to have the contractor or vendor see the bigger picture of having you as a client. Even though they may be fatigued, most companies do understand to some degree or another the LTV or Lifetime Value of a customer. If they can see past just this order and there could be repeat business, they may be induced to lower their price for this time, due to the opportunity you bring them in the future.
9. One big way to get the best price is to ask the vendors to quantify their bid.
This can be done in several ways. For service requests, ask how much time they anticipate for the job, along with the number of workers they expect. Also, ask them to quantify the number of repairs within their bid. This is one of the best ways to compare “apples to apples.” Products, have them list all the specifics that would separate their bid from their competitors. Some vendors throw in extra features that you may not need and can strip out options out to potentially improve the price.
10. Another way to help with the bid is to ask the vendor to qualify their bid. This allows the vendor to articulate why they are the best and what they bring to the table. They may have steps or processes that may not be needed, and you can negotiate a better deal by taking those items out of their bid. This can be done over the phone, but face to face is the best. Some would call this a descope meeting, descoping is reviewing the bid and going through it line by line. While that may not be necessary, you can uncover some good things to know about how they plan to fulfill the order or contract. I find that the more you know and even ask the most basic of questions can make a world of difference, don’t give your contractor or vendor the benefit of the doubt until you have worked with them numerous times.
Keep in mind that it comes down to the idea that if the vendor works hard and gives you their best price, they have a better chance at winning your business. If they walk away with that feeling, they are far more inclined to give you their best stuff right out of the gate.
With that being said, the last tip for getting the best price is to ask for it simply. These next seven words can save your facility thousands of dollars. Ready for it…. “Is this the best that you can do?” Ask that question, and ‘don’t say another word. Most times, vendors will knock off a little more. And if not, then you know that you have given them all the opportunities possible to win your business with their best price.
If you want to dive deeper into this subject, check out our article on negotiation and powerful persuasion. This is where you can take the tricks of the salesman/saleswoman and turn the tables.