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The Hidden Costs Of Going With The Lowest Bid

If a company needs to improve its communications, the first step is bringing in local A/V contractors for bidding purposes. And once the process is underway, the company gets back several bids, including one that is irresistibly low – maybe even 50 percent less than the highest bid. At first, this may seem like a stroke of good fortune, after all, there are a lot of places that extra money could be allocated to, but is it a windfall, or a trap? With few exceptions, there are real concerns when going cheap, especially when something as important as an A/V system is on the line. In fact, choosing the cheapest option might cost the most in the long run.

What are the additional costs a company may incur by choosing the lowest bid?

It’s not always a bad sign when a contractor puts in a low bid, but if it’s much lower than other bids, then consider it a red flag. In general, companies should expect a 10, even 20 percent variation between contractors, and anything outside of this range is likely cause for concern.

But why exactly is it a concern? Why should businesses avoid a particularly low bid?

There are many reasons a bid might be especially low. In general, the only time an exceptionally low bid is acceptable is if the contractor is new to the industry or new to the area, and they need to build up clientele. While this can prove to be advantageous to a company, it can also represent its own risk, as without an established track record, a client can’t predict how the contractor will perform, especially long-term.

And there are many more things to be wary of when accepting a low bid. For example:

  • The contractor is offering inferior components. There is a lot of A/V technology on the market, and some integrators use outdated or poorly manufactured technology to cut costs. Once installed, inferior technology will offer poorer returns and will fail sooner, requiring an expensive replacement before long. And the kind of integrators that offer inferior technology usually offer inferior service as well, so replacing a system may not be so simple.
  • The contractor is offering fewer components than what is truly needed. If a contractor is shortchanging a client on the number of components needed, then they may not fully understand the company’s needs.
  • The contractor may have to upcharge with needed accessories. It’s possible that the contractor is offering basic technology, expecting to charge the company more as the project develops.
  • The contractor may offer no post-installation support. It may seem like an expendable cost, getting rid of post-installation support, but this is a big risk for a company to take. With no ongoing support, a company may sustain extended downtime should the system suffer a technical failure.
  • The contractor has vastly underestimated labor costs. This is a common one, as many contractors don’t take the time to thoroughly consider what’s involved prior to a project. This can lead to a bill that seems to constantly increase.

An A/V system is a significant investment in the company, so a low bid isn’t always the right choice. By considering all bids, a company will ensure a favorable return on that investment.