Outbid - rant

Noel Evans

Noel Evans

Mod V3 New and Improved
Staff member
God I find this annoying. Quoting on a job, only to have some company come in cut your price in half. Client called me and said could I match to which I graciosously declined, I then tried to explain the benefits etc all they thought about were a few $$. That doesnt bother me so much but - why are people so willing to cut in and slash prices so theres no point at all doing the job?

This was a two camera set up, editing, DVD output
 
jaustere said:
Sorry to hear that. What kind of gig was it?
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Was a music live set. I have done about 20 in the last 12 months and they go for someone who has shot one classical performance? I did a gig that included a short set from this band before plus 3 others and the band loved it. Management has set the budget. They are releasing a new CD and management assures me if they can pick up some more income there will be about 3 shows they will book me for down the track - but these are words.

Agree Kholi.
 
If i could find someone to undercut by 50% i would do it too thats how bad it is around these parts.
 
Look at the bright side. You usually get what you pay for. So, you'll at least have the satisfaction of knowing that they will probably wish they went with you....

Also, since they 'told' you the other firm was charging half price, maybe they were just bluffing to get you to come down a little....could happen....
 
Agreed. Maybe the contractors will do a great job? Though, if they don't, it'll ring of regret for quite sometime; ensuring that you're the first name in their minds on the next go.

No sweat, other jobs around the corner.
 
ask who they are - they may be bluffing and come crawling back a few days later with some BS story - happens a lot.
 
Just for a FLIPSIDE...I once lost a bid for two HD INTERNET videos...5-10 min each...to a company that OVERBID us by $300,000. That's right, they went over our bid by $300k. The Ad agency felt that there was something wrong if we bid that little...plus the director knew the other post house so they went with them.

BLEW OUR MINDS! Couldn't believe it. What makes it worse? THEY WENT OVER BUDGET!

Still trying to figure that one out. $300k is more than the ENTIRE budget I have for History Channel shows in HD...2 hour HD shows. So...I just don't get it.
 
Shane Ross said:
Just for a FLIPSIDE...I once lost a bid for two HD INTERNET videos...5-10 min each...to a company that OVERBID us by $300,000. That's right, they went over our bid by $300k. The Ad agency felt that there was something wrong if we bid that little...plus the director knew the other post house so they went with them.

BLEW OUR MINDS! Couldn't believe it. What makes it worse? THEY WENT OVER BUDGET!

Still trying to figure that one out. $300k is more than the ENTIRE budget I have for History Channel shows in HD...2 hour HD shows. So...I just don't get it.
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Sounds like someone got a kickback to me. Never know, these things exist all the time. I have a friend in Afghanistan bidding on Government jobs there. Most of the bids are in the millions and yeah, he mentioned that he had to kick some back to the person in charge like 50 grand or something for a 2 million dollar project.
 
You get what you pay for.

I'd rather turn down a client on a counter-bid. I have rent to pay. When it comes to editing and you undercut yourself, you put yourself in negative cashflow once you get into editing.

A client told once me he found someone "Willing to do it for less... but I'd rather let you do it for that price." (Keep in mind, I had completed their first project in 9 weeks)

I said, "You don't let me do anything. I should be letting YOU pay me what I ask for. What he is offering you is a great deal. Take it." and I encouraged him to go with the other guy.

That was 5 months ago. (The project is not finished and now they are willing to pay me what I ask for hourly to polish and online the job for them because the guy they went with sucks **** and isn't good enough to finish the job.) Unlucky for them, I am busy until end of Spring.

If you are a good editor, and you do a great job for a client, they always come back if you establish a healthy relationship with them and give them the confidence you have editing their project.
 
ncje said:
Was a music live set. I have done about 20 in the last 12 months and they go for someone who has shot one classical performance? I did a gig that included a short set from this band before plus 3 others and the band loved it. Management has set the budget. They are releasing a new CD and management assures me if they can pick up some more income there will be about 3 shows they will book me for down the track - but these are words. .
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FWIW, you have good instincts and did the right thing by passing on the job. Words are just words. I wouldn't do a job for half the price on an empty promise of future work. Chances are the management is going to want that future work at the low ball price. You've finished 20 projects in the past year, you know exactly how much time it takes. You can give the client an honest price that's fair to you and them. The problem is with them wanting it for less and that's exactly what they will get with the new vendor. The key to declining work is doing it in a polite way. You don't want to appear angry or resentful. You name your price and stick to it. If they ask you to back down say, "this is a fair price and I can't do it for less". It sounds like that's what you did. Thank you for not engaging in the undercutting game that hurts everybody. Here's my take on how this will play out. The new vendor will either deliver a product that is sub par or they will kill themselves on the job and provide an outstanding product. If it's the latter, when they bid on the next job they'll bid much higher because they lost money on the last job. Either way I expect the management to be back asking for more work because you've proven yourself. If you're feeling brazen you could tell them your rates have gone up 25% since the last time you worked with them, but since they are a long time client you'll give them a 10% discount. :happy:
good luck
 
That's the business. Could be incentive, perhaps inexperienced line-production or just someone willing to take a loss to get in the door. That's frustrating.

I immediately get back with the client and let them know I'll check my numbers again - has their project specification changed? Did they talk forward the RFP with the other production company - did the other company have information that would warrant a reduction of that magnitude?

I've found that RFPs usually target five proposals, so the client has an opportunity to see an average cost. Then they can weigh reputation, experience and cost properly.

When I was bidding live events, we would tell our clients that 85% of our shows came in under budget.

Typically, shows that went over, went over due to client-assumed changes after the initial proposal was signed. We told clients to ask lower bidders about their on-budget ratio. Often, they wouldn't get an answer they liked or trusted and we would end up with the mandate even though we were 8 - 15% higher.

I recently heard from a reality producer that they were having trouble with the quality of their hometown packages. He remarked that they had stopped flying their a-list camera operators into remote markets - instead trying to hire unknown locals they'd never worked with. After three packages came back unusable, they have reverted back to hiring known DPs that have to be traveled for the work.

Don't get too hung up on it.

They'll likely come around after seeing that there was little value in contracting sub-par contractors. Or, perhaps you'll find that you simply didn't write a fiscally-sound proposal. I'll put my money that is wasn't the later.

You know what you're doing - let the other guy make the bad business decision.

e
 
milksac said:
Chances are the management is going to want that future work at the low ball price.
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100% agree. I shot 5 videos for a company that I tried the "get my foot in the door method" with and what do you know, they lowered the rate they were willing to pay bacause someone undercut me, I thought I was working for nothing (and I was) but turns out if a client only cares about price usually one of two things happens: they get burned and come back, or they settle for crap.
 
ncje said:
God I find this annoying. Quoting on a job, only to have some company come in cut your price in half. Client called me and said could I match to which I graciosously declined, I then tried to explain the benefits etc all they thought about were a few $$. That doesnt bother me so much but - why are people so willing to cut in and slash prices so theres no point at all doing the job?

This was a two camera set up, editing, DVD output
Click to expand...
Surely you overpriced the bid intially so you could bring your price down, right??

Salesmanship is a skill. Do you have the salesmanship skill to build value in your pricing that no-one can dispute?
 
The point of production companies is to make a profit. How wide the margin will be is based on what the market will allow, cost of goods et-cetera. In this case, the market will allow someone to do this job for half. What this client will end up with is another story and remains to be told.

The client is absorbing the risk, not ncje - who has made the right decision not to match the competing proposal. Ncje has eliminated the risk of exposure by passing on what he knows is bad business for several reasons. Why is it bad business in the present and the future?

1. The job likely may not be accomplished to the specification in the proposal at the cost indicated. The client or contractor will have to cover or absorb the difference. Contracts protect, but litigous collection on the back-end does little to strengthen relationships in the long-term.

2. The contract enforces that the new market value is half of the fair-market price. Bringing down rates from FMV hurts the industry. If you're consistently off your competition by 15% or greater, it is a good time to conduct some market research. Make adjustments as necessary.

If you consistently place at or within a few points of your competition, and are turning a consistent profit, you might well be well-positioned. "Too much profit" isn't necessarily an indicator that you're treating the marketplace unfairly. To the contrary, you might offer a service, product or level of quality not otherwise available in your market.

Our margin on products we sell online barely registers. Selling a product that no one else does gives the seller leverage. SteadiCam had virtually no competition for decades. Now, there are at least three in the market and SteadiCam prices have adjusted appropriately. Their products are still the premium and everyone knows it.

Fixed-cost has to be figured into the cost of the products and services you sell. There is a value and it must be determined. I would also add that someone who comes to the table with gear and labor at 50% [below] fair market value might not be able to do so for very long. It simply won't balance in the long-term.

In any business, you must effectively follow the same basic rules around demand, availability (saturation) and fair market value to guarantee fiscal security.

e
 
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Maybe take the gig nextime to show the company the real work you can do; and then, raise your prices on the next gig for them
 
John_Hudson said:
Maybe take the gig nextime to show the company the real work you can do; and then, raise your prices on the next gig for them
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The band in question where featured on another shoot I did so management knew full well my capability.

This thread has become mute in the last hour as management called me again and have advised that they will use me for my quoted price. Have to love when that happens.
 
stephenlnoe said:
Surely you overpriced the bid intially so you could bring your price down, right??

Salesmanship is a skill. Do you have the salesmanship skill to build value in your pricing that no-one can dispute?
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Absolutely sir, and when they came back the second time and asked me my best price I gave it. It was the day following this - yesterday that they called me to say they were going with XYZ if I couldnt match.

Then today the change of heart.
 
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