The Business Side: Fighting the lowball price battle.
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.
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
• architectural surveys
• accident-site surveys
• construction stakeout
• oil well locations
• ALTA surveys
• flood study surveys
• wetland delineation
• mining lease surveys
• 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.