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The Business Side: Fighting the lowball price battle.
by Milton Denny, PLS
February 1, 2010

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As I talk to surveyors around the country, the most common complaint I hear is that many companies are all but giving away their services to their clients.

One surveyor recently told me that he turned in a price of $1,600 for a small ALTA survey. When he did not hear from the client after a few days, he called to inquire on the status of the work. He was informed the work was awarded to another firm for $300.

While most cases are not as extreme as this example, it’s an alarming trend. I know that needing work leaves a surveyor in a very difficult position, but we need to stop and think about who we are and how different our services are from other businesses.

First and foremost is that we hold ourselves to be professionals. Providing services at a lower cost at the expense of a quality product is not only a professional issue but also an ethics issue. Many of us, through our local and national professional associations, have spent many years working toward securing an adequate fee for our product only to see our work unravel in a relatively short period of time during the recent recession. I call this phenomenon lowballing the lowball price. I think we would all agree that even if offered, we would not take a $1,600 job for $300. But what can we, as professional surveyors, do about such a practice?

I am going to try to give you some common-sense responses to this very difficult situation.

Don’t Bid

When responding to a request for a price, make sure it is not a bid. In my many years of private practice, I was never the low bidder on any project where other prices were requested. There is a level of basic services--including wages, benefits, marketing expenses, modernizing equipment and profit--that you can’t bid below and still stay in business. You surely can’t stay in business doing $300 ALTA surveys. By not bidding, at least you will save the cost of developing a price.

Streamline Your Firm

If you have not already streamlined your company using technology, this is the time to get started. I talked to one surveyor who tried to maintain his 30-person firm by borrowing money and only reduced his workforce to seven employees after the bank would no longer lend to him. He is now turning out work with technology and making a profit. However, he has a very large debt to repay to his local banks.

Be Proactive, Not Reactive

The most-common method surveyors use to get projects is to wait for clients to contact them and request a price. However, being successful in today’s economy requires a proactive approach--you have to actively seek out prospective clients. This is also a very systematic, long-range way of developing work.

Identify opportunities where you might be able to provide useful services. In addition to boundary line and city lot surveys, consider:

• land planning

• hydrographic surveys
• architectural surveys

• city or town maps
• accident-site surveys

• recreational maps
• construction stakeout

• pipeline surveys
• oil well locations

• cell towers
• ALTA surveys

• GPS control
• flood study surveys

• LIS/GIS services
• wetland delineation

• subsidence surveys
• mining lease surveys

• water title boundaries
• topographical mapping
• engineering surveys
• aerial mapping/photography
• machine control for construction
• communication company surveys
• subdivision design and layout
• expert witness and court-ordered surveys
• hazardous-waste-site work
• oil and gas well location and permitting
• surveys for governmental agencies and permitting

In my many years of experience, I have provided services in all of these sectors at one time or another. This is one of the reasons I was always able to provide employment for my staff, even in some very slow times.

Being proactive has to start with a positive attitude, which will become contagious with your staff and clients. Get started today. It’s never too late.

Understand the Liability of a Low Bid

No matter what the price, you, as a professional, have a responsibility to deliver a quality product that is controlled in most states by a set of standards provided by the board of licensure. Of course, receiving an adequate fee for the work makes it easier to meet these standards. From a business point of view, if the price for the survey doesn’t allow you to make a profit, all you are doing is digging a deeper financial hole and wasting time.

Some of the markets served by surveyors are going to recover very slowly over the next decade. The big question to consider is: How do we in the surveying profession recover from the price war craziness? It took years to elevate the value of surveying to an acceptable level. If you slash your prices now, how will you explain to clients in the future why your $300 ALTA survey now costs $1,600?

Don’t play the lowballing the lowball price game. Develop work with clients who will value your services and pay a fair price.

Milton Denny, PLS
Milton Denny, PLS, is the owner of Denny Enterprise LLC in Tuscaloosa, Alabama, a company serving the surveying and mapping community through consulting and seminar services.

Comments (5)

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Title: Low balling in the Seattle area
By: Gary
Posted: February 4, 2010 8:10 PM

I have witnessed this low-balling practice first hand and also heard from other surveyors of their experience with low-balling. Its usually from a surveyor that is working out of his garage with no overhead or employees to pay. These are hard times and people are doing what they must to stay one step ahead of the bills.

Title: Low-balling the Low-ballers
By: Dick Lawrence
Posted: February 10, 2010 2:39 PM

Milt your message is right on the mark! Unfortunately, this destructive practice has occurred with every recession over the last thirty years that I'm aware of. And you are correct, when the recession was over the surveyors never could recover their fees. And with each succeeding recession, they lost more ground. Now with a recession to make all others pale to insignificance, the low-balling has been taken to incredible levels. It appears that it is more extreme in the rural areas than in the urban areas, but it is still happening industry-wide. I believe that this recession may bring about the demise of "traditional surveying" as we know it and be the harbinger of the "new wave technology geomatics" of the future.

Title: Low-balling prices
By: Jesse Collins
Posted: February 10, 2010 4:10 PM

I agree whole heartedly with everything you said in your article Mr. Denny and I agree with Dick Lawrence's comment that every slow work time brings out the vultures of the survey profession when they begin to cut prices just to get work. It makes me wonder each time this happens if we are truly professionals as surveyors in the business world! The world of computers today makes it so easy to plagirize another surveyor's work that if you combine the two together a surveyor today can almost work for free. How can one feel good about himself if it takes less overall time to complete a job and charge such high fees? Of course if that surveyor knew he was a PROFESSIONAL he could sleep at night.

Title: Low Ballers
By: Patrick Naville
Posted: February 17, 2010 4:37 PM

Milt:
Well said and think anyone who's reading POB would probably agree with your sentiments. However, I think a lot of the surveyors who are low-balling probably never pick up this, or any other survey magazine. These are the same surveyors who never record their surveys. The bad side of all of this is, when the economy comes back, those who use survey services are going to expect the ridicously low prices, or think they're getting gouged!

Title: Low Ballers
By: Mike Moll
Posted: March 4, 2010 9:02 PM

I have a civil engineering degree (emphasis in surveying), but now am a Grading Contractor (family business). Be thankful you're not a contractor. Low bid gets the job, and the contracts are written against you. If the contractor makes a mistake and the engineer doesn't catch it, it's the contractor's fault (fair enough). If the engineer makes a mistake and the contractor doesn't catch it, it's the contractor's fault (sounds like the engineer wrote the contract, doesn't it?). Surveyors should get a fair price, but shouldn't the same go for contractors, or airlines, or GM? When was the last time you worried about paying too little for an airline ticket or truck?

Your customers want you to make money, they just want you to make it off from somebody else. They want you to do their job right at cost - or, if it was just a little under your cost, that wouldn't matter, because "it wouldn't hurt you any" (a quote I've heard).

I find it strange that the same engineers who brag about never competing on price are the ones who spend the most time beating me up over price. I wonder why that is.

Surveying is a tough business, but when you look around, there really aren't very many easy ones, especially in this economy.

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