Hello, everyone.
This is Enta.
On my way back from Nagano, a question came to mind.
It's about money, though, lol
Is a low unit price bad, or is a high unit price bad?
Well, I suppose how people perceive it depends on their perspective.
So, I took it upon myself to weigh the pros and cons.
Advantages and Disadvantages of Low Unit Prices
Prime Contractor
1. Profitable
2. The salaries of employees at the general contractor may increase.
3. Improving Technical Skills (Study, Certifications, etc.)
4. Employee Retention (Comprehensive Salaries and Benefits)
5. Investment in Machinery
6. Subsidies for Other Loss-Making Operations
7. Bonus
Subcontractor
1. Decline in quality (due to rushing)
2. Reduced Safety (Due to Rushing)
3. Decline in employee salaries (the company isn't making a profit)
4. Poor maintenance of equipment (unable to replace consumables)
5. Declining employee motivation (low wages)
6. Departures from the Industry
7. Delays in the construction schedule due to a shortage of personnel
Advantages and Disadvantages of High Unit Prices
Prime Contractor
1. It's not profitable
2. My salary will go down
3. The company will post a loss, which will lower its financial review score (making it harder to win bids).
4. Decline in Technical Skills
5. Employee Turnover
6. Aging of Machinery
7. Deterioration of Employee Benefits
8. No bonus
Subcontractor
1. Profitable
2. Improved Quality (A Trend Toward Greater Care)
3. The accident rate decreases because employees aren't rushed.
4. Enhancing Machine Maintenance
5. We are able to provide adequate training for new employees
6. My salary will go up
7. A bonus is paid out
—— ◇ —— ◇ —— ◇ —— ◇ —— ◇ —— ◇ ——◇ —— ◇ —— ◇ ——
I'm sure there are other things as well, but is this roughly the gist of it?
I suppose a well-balanced estimate is the best one, isn't it?
I want to make even a little profit. I want to avoid losses as much as possible.
However, we can't cause any trouble for the general contractor.I want the general contractor to make a profit.
I hope that by doing a good job and earning a high score, it will help us even a little bit in the next bid.
That's what I'm thinking.
But things don't always go that smoothly in this world, do they?
With work already scarce and the prime contractor desperate, low bids and price wars are the norm.
It's the same with subcontractors—if one side cuts prices, the other side follows suit.
Price competition is really tough...
With so many specialists in our field, I guess the challenge going forward will be figuring out where our company fits in.
Maybe trying to figure out the right balance for the estimate while thinking that is one approach...
Giving estimates is tough. It’s a skill in itself. I wonder if it’s also a kind of psychological battle?
Will a single quote land me the job—or leave me with nothing to do?
A while back, a senior salesperson once told me that there are times when you have no choice but to take a deal, even if it means lowering the unit price.
That reminded me of it.
How about we set out on a journey to find a middle ground with a well-balanced quote? lol
See you later.
