Is this business as usual or slimy business as usual?
May 29, 2015 6:31 PM Subscribe
What do you do when a prospective client makes you work hard on clarifying their goals and needs, asks to get a comprehensive bid, and then uses that bid to shop around for a lower price?
A company whose contract is very desirable asked for a bid on a project. They had a germ of an idea of what they wanted but in order to submit a bid, a lot of work had to be done in order to identify what their objectives were. The bid was submitted and we found out that they were showing the objectives section of the bid to others and asking what their price for the project would be. One of the other bidders said that they can give a price if they format the project into 3 phases. The company has come back to request that we do this. I am at a loss.
It is causing anxiety and anger. But if we win the contract, it is a pretty big deal. I am not in the position to blow off the client because it is not just my livelihood on the line. How have you handled this? How would you handle this? Is this standard practice?
A company whose contract is very desirable asked for a bid on a project. They had a germ of an idea of what they wanted but in order to submit a bid, a lot of work had to be done in order to identify what their objectives were. The bid was submitted and we found out that they were showing the objectives section of the bid to others and asking what their price for the project would be. One of the other bidders said that they can give a price if they format the project into 3 phases. The company has come back to request that we do this. I am at a loss.
It is causing anxiety and anger. But if we win the contract, it is a pretty big deal. I am not in the position to blow off the client because it is not just my livelihood on the line. How have you handled this? How would you handle this? Is this standard practice?
They're explicitly requesting that you spend time making revisions to your bid for the benefit of a competitor who wants to use it to crib from, presumably to make themselves look like the better choice? This sounds like the kind of client you're better off without.
You don't mention your industry, but in mine (residential low voltage and automation) it's unfortunately pretty commonplace for a client to have us spend time working up a detailed proposal only to use it as a plan for someone cheaper and less experienced to follow. There's not much recourse other than to walk away sooner rather than later, and to be as vague as feasible in the early stages about exactly how you're going to meet the spec you've outlined.
posted by contraption at 6:45 PM on May 29, 2015 [10 favorites]
You don't mention your industry, but in mine (residential low voltage and automation) it's unfortunately pretty commonplace for a client to have us spend time working up a detailed proposal only to use it as a plan for someone cheaper and less experienced to follow. There's not much recourse other than to walk away sooner rather than later, and to be as vague as feasible in the early stages about exactly how you're going to meet the spec you've outlined.
posted by contraption at 6:45 PM on May 29, 2015 [10 favorites]
Best answer: My personal experience is that whenever I deal with a client that tries to be shady and take advantage, no amount of policing them or contracts makes it a "win-win."
I only do business with folks who are ethical.
I don't know your industry and what you perceive to be a problem might be normal? Or not so bad? In general, don't work for free and don't do the other guy's homework for them.
I would pass I this client because they will want things for free and no amount of $$ will make the headaches and stress worth it. YMMV.
posted by jbenben at 6:54 PM on May 29, 2015 [11 favorites]
I only do business with folks who are ethical.
I don't know your industry and what you perceive to be a problem might be normal? Or not so bad? In general, don't work for free and don't do the other guy's homework for them.
I would pass I this client because they will want things for free and no amount of $$ will make the headaches and stress worth it. YMMV.
posted by jbenben at 6:54 PM on May 29, 2015 [11 favorites]
You're not in the anger business. You're in the "please the client" business. I have sat in negotiations with clients and been all, "we can't give you this, because my lawyers said this." And I was like, "okay, but I want this, despite what your lawyers say," and I got the deal. You have to keep a cool head in business. It is not personal, and it is not angry. It is business. If you can't keep a cool head in these dealings, then hire someone else to do it for you.
posted by Marie Mon Dieu at 6:59 PM on May 29, 2015 [2 favorites]
posted by Marie Mon Dieu at 6:59 PM on May 29, 2015 [2 favorites]
Best answer: I know that this is tough. But as others have said above, these may not be the kind of people you want to work with for a large project like this.
State your price for creating a phased report and be prepared to lose them if they balk, then try for the next client. If they do stick around, and if you do agree to work on the phased project with them, be very, very careful about 1) invoicing and GETTING PAID at all designated milestones and 2) any signs of scope creep.
I learned this lesson the hard way as a web/e-learning developer. I no longer write free proposals for big jobs, but now offer these clients two options:
1) I can provide an excellent, detailed analysis as a one-off project. They have to hire me to clarify their objectives and suggest solutions, and I have to get at least partial payment before I give them the report. The report is work for hire that they are free to analyze internally or shop to other developers. They might hire me, they might hire someone else, or the project may never get done, but I have still provided something of value that they should damn well pay for.
2) I dial back the scope and offer to create a brief proposal for one element of the project, then create a prototype to address those objectives. The proposal is free (I have a template that can be adapted relatively quickly) and the prototype is invoiced at specific milestones. I learn much more about the project as a whole this way, and the client and I also learn a lot more about each other and how well we mesh.
(All hail Mike Monteiro for beating this lesson into my head. I highly recommend Design is a Job and any number of his videos, including Fuck You, Pay Me.)
posted by maudlin at 7:00 PM on May 29, 2015 [30 favorites]
State your price for creating a phased report and be prepared to lose them if they balk, then try for the next client. If they do stick around, and if you do agree to work on the phased project with them, be very, very careful about 1) invoicing and GETTING PAID at all designated milestones and 2) any signs of scope creep.
I learned this lesson the hard way as a web/e-learning developer. I no longer write free proposals for big jobs, but now offer these clients two options:
1) I can provide an excellent, detailed analysis as a one-off project. They have to hire me to clarify their objectives and suggest solutions, and I have to get at least partial payment before I give them the report. The report is work for hire that they are free to analyze internally or shop to other developers. They might hire me, they might hire someone else, or the project may never get done, but I have still provided something of value that they should damn well pay for.
2) I dial back the scope and offer to create a brief proposal for one element of the project, then create a prototype to address those objectives. The proposal is free (I have a template that can be adapted relatively quickly) and the prototype is invoiced at specific milestones. I learn much more about the project as a whole this way, and the client and I also learn a lot more about each other and how well we mesh.
(All hail Mike Monteiro for beating this lesson into my head. I highly recommend Design is a Job and any number of his videos, including Fuck You, Pay Me.)
posted by maudlin at 7:00 PM on May 29, 2015 [30 favorites]
Either walk away or hand them a bill for services rendered to date. That's just assholish behavior on their part. You don't want their business no matter how "desirable" they may be.
posted by Thorzdad at 7:02 PM on May 29, 2015 [1 favorite]
posted by Thorzdad at 7:02 PM on May 29, 2015 [1 favorite]
Taking your proposal and having others bid on it? Sketchy, but not necessarily unusual. Asking you to redo your proposal so its easier for them to get bids from your competitor? Outrageous.
As for what to do about it, politely decline. There are a few ways to do it. One of them is to break the project into phases, as they've asked. Don't put too much more time into it. Call the first phase discovery, and set the price to cover the time you've already spent. The next phase is project planning. Price it to cover the work they want you to do at the request of their competitor. The subsequent phases are to be determined based on the results of discovery and project planning phases. They will almost certainly pass, but if they don't, you'll have put your business relationship with them on better footing.
posted by Good Brain at 7:09 PM on May 29, 2015 [8 favorites]
As for what to do about it, politely decline. There are a few ways to do it. One of them is to break the project into phases, as they've asked. Don't put too much more time into it. Call the first phase discovery, and set the price to cover the time you've already spent. The next phase is project planning. Price it to cover the work they want you to do at the request of their competitor. The subsequent phases are to be determined based on the results of discovery and project planning phases. They will almost certainly pass, but if they don't, you'll have put your business relationship with them on better footing.
posted by Good Brain at 7:09 PM on May 29, 2015 [8 favorites]
Best answer: They may well be looking to screw you over, but it isn't entirely clear whether they are asking for your bid in that format to shop it out again or because they like your work and want your bid to be competitive against one they know their execs will like, or what. You always have to keep in mind that the people on the other side of the table have potentially arcane-to-outsiders rules and procedures they have to follow along with hidden constituencies to please with every decision. Ultimately you never know until you find out, so the decision seems to boil down to how much it would hurt to eat the effort if you try and they screw you. It's probably not that big of a deal relative to the potential upside.
I would steer clear of making any demands for payment, unless you can manage to seamlessly transition into some more thorough requirements gathering project. If you decide to walk, just give them the slow fade and don't talk about why or burn any bridges. You never know what the future may bring.
posted by feloniousmonk at 8:26 PM on May 29, 2015 [3 favorites]
I would steer clear of making any demands for payment, unless you can manage to seamlessly transition into some more thorough requirements gathering project. If you decide to walk, just give them the slow fade and don't talk about why or burn any bridges. You never know what the future may bring.
posted by feloniousmonk at 8:26 PM on May 29, 2015 [3 favorites]
When I was in the commercial construction business, bids were sealed and all opened at the same time. In the business I'm in now we share information with our customers, clients and vendors but make them sign a non-disclosure agreement. If they use our proprietary information for any purpose not spelled out in the agreement, then we threaten and if necessary, take legal action against that company.
posted by Grumpy old geek at 8:45 PM on May 29, 2015 [2 favorites]
posted by Grumpy old geek at 8:45 PM on May 29, 2015 [2 favorites]
Could you meet with them and go over the bid in person without giving them a copy of the breakdown? An NDA is an option, but there's no guarantee they will stick to it. I do remember when I signed onto to do some consulting, I had to sign an NDA regarding the scope of the work and the project. How do you know that they took your proposal to another company for bid shopping and the competitor wanted it in three phases? Did they tell you that? If so, is that an opportunity to ask what they are looking for that your proposal didn't offer, and try to win them over?
One option is you can say you won't break it down into three phases because that is the price for all the work to be delivered. Then the competitor is left trying to beat that price with their own preferred format. I don't know your industry, so it's hard to know why the competitor needs it broken down into three phases. Could they want to be able to price it at three points and convince the client that one of phases can be scaled back or changed to reduce the overall price? Could they be looking for things you are going to do and then tell the client they don't need those things? You could just say, "look, this is the price, and once you sign a contract and submit a down payment for part of the work, we can break it all down step-by-step and, depending on any scaling back you want, reduce the total price if the project changes."
I don't run a business or deal with bids or anything like that so I have no experience here. If this client is important, you may just need to play ball and do what they want to try to win them. But I would try to meet with them in person, make them feel comfortable and connected to you, and avoid giving them enough in writing for another firm to just copy and undercut.
posted by AppleTurnover at 9:10 PM on May 29, 2015
One option is you can say you won't break it down into three phases because that is the price for all the work to be delivered. Then the competitor is left trying to beat that price with their own preferred format. I don't know your industry, so it's hard to know why the competitor needs it broken down into three phases. Could they want to be able to price it at three points and convince the client that one of phases can be scaled back or changed to reduce the overall price? Could they be looking for things you are going to do and then tell the client they don't need those things? You could just say, "look, this is the price, and once you sign a contract and submit a down payment for part of the work, we can break it all down step-by-step and, depending on any scaling back you want, reduce the total price if the project changes."
I don't run a business or deal with bids or anything like that so I have no experience here. If this client is important, you may just need to play ball and do what they want to try to win them. But I would try to meet with them in person, make them feel comfortable and connected to you, and avoid giving them enough in writing for another firm to just copy and undercut.
posted by AppleTurnover at 9:10 PM on May 29, 2015
Best answer: Is this standard practice?
As said above, you don't mention your industry, but it's pretty common in my business (I work for a company that provides & operates sound, lighting, and staging equipment for concerts and other live events.) Mostly, we just shrug and hope that our reputation for quality work is strong enough that they'll go with us even if our price isn't the lowest. And if they're shopping around solely for price, it's often a red flag that they're not a good client (no matter how "big" they are), and we'd be just as happy to pass on the gig.
I'll second feloniousmonk that this runaround might not be all about price - your potential clients could very well have their own rules & policies & internal politics that they have to cover. My company has some clients that are required by either law or Official Company Policy to get multiple bids for every project, even when everyone involved knows with 110% certainty which company is actually going to win the bid. Maybe they're asking you to re-format your bid because a higher-up (who will have to approve the project but will have no other involvement) liked the look of three phases after he/she saw it and now wants all bidders to format their bids this way; so for your potential clients, it's Appease The Nutty Boss Time.
How have you handled this? How would you handle this?
Option 1) If you really really really think that landing this client is worth it, put in a little more effort and reformat your proposal as three phases - but don't drop the price. Definitely add terms about getting paid in full for the previous phase before starting the next one and/or requiring deposits before each phase.
Option 2) Politely point out that you've already sunk a bunch of time and money into your first proposal and you really can't justify any additional work, they'll just have to live with your bid as it sits. (You may lose the job over this, but . . . . . . (see below) )
I am not in the position to blow off the client because it is not just my livelihood on the line.
Big Picture time, here - you have to have some faith that even if you lose this bid, there will be other clients, and better clients, too. I mean, good for you for thinking about the potential income for your employees and/or partners and/or contractors, but you shouldn't let the potential big payoff paralyze you or keep you from taking a cold hard look at the potential downsides to this client. (Because, believe me, some people will use promises of a long relationship and a big payday to take advantage of you. "A bird in the hand is worth two in the bush", as the saying goes, and a smaller client that pays their invoices regularly and on time is often "worth" more than a Big Deal Client that runs you ragged and somehow never manages to catch up to the big dollars they owe you.) "Livelihood" isn't always 100% about money - if this client turns out to be a huge pain in the ass, do you really think your employees/partners are going to be thrilled that they're spending 80 hours a week chasing their tails because the client is bonkers?
And speaking from experience, if they genuinely are shopping your bid around to see if they can get a lower price from someone else, that's a good sign that they're big on promises and pie-in-the-sky, but likely not so good on actually paying you real money in a timely fashion, and very likely to constantly be nudging you to drop your prices and cut them a break; "Look at all the work we've given you!", they'll say. "Just do this one minor thing for us at no additional cost!" - as your employees cancel their dinner plans and fire up the coffee machine at 8 pm on a Friday . . . . . . .
posted by soundguy99 at 11:33 PM on May 29, 2015 [13 favorites]
As said above, you don't mention your industry, but it's pretty common in my business (I work for a company that provides & operates sound, lighting, and staging equipment for concerts and other live events.) Mostly, we just shrug and hope that our reputation for quality work is strong enough that they'll go with us even if our price isn't the lowest. And if they're shopping around solely for price, it's often a red flag that they're not a good client (no matter how "big" they are), and we'd be just as happy to pass on the gig.
I'll second feloniousmonk that this runaround might not be all about price - your potential clients could very well have their own rules & policies & internal politics that they have to cover. My company has some clients that are required by either law or Official Company Policy to get multiple bids for every project, even when everyone involved knows with 110% certainty which company is actually going to win the bid. Maybe they're asking you to re-format your bid because a higher-up (who will have to approve the project but will have no other involvement) liked the look of three phases after he/she saw it and now wants all bidders to format their bids this way; so for your potential clients, it's Appease The Nutty Boss Time.
How have you handled this? How would you handle this?
Option 1) If you really really really think that landing this client is worth it, put in a little more effort and reformat your proposal as three phases - but don't drop the price. Definitely add terms about getting paid in full for the previous phase before starting the next one and/or requiring deposits before each phase.
Option 2) Politely point out that you've already sunk a bunch of time and money into your first proposal and you really can't justify any additional work, they'll just have to live with your bid as it sits. (You may lose the job over this, but . . . . . . (see below) )
I am not in the position to blow off the client because it is not just my livelihood on the line.
Big Picture time, here - you have to have some faith that even if you lose this bid, there will be other clients, and better clients, too. I mean, good for you for thinking about the potential income for your employees and/or partners and/or contractors, but you shouldn't let the potential big payoff paralyze you or keep you from taking a cold hard look at the potential downsides to this client. (Because, believe me, some people will use promises of a long relationship and a big payday to take advantage of you. "A bird in the hand is worth two in the bush", as the saying goes, and a smaller client that pays their invoices regularly and on time is often "worth" more than a Big Deal Client that runs you ragged and somehow never manages to catch up to the big dollars they owe you.) "Livelihood" isn't always 100% about money - if this client turns out to be a huge pain in the ass, do you really think your employees/partners are going to be thrilled that they're spending 80 hours a week chasing their tails because the client is bonkers?
And speaking from experience, if they genuinely are shopping your bid around to see if they can get a lower price from someone else, that's a good sign that they're big on promises and pie-in-the-sky, but likely not so good on actually paying you real money in a timely fashion, and very likely to constantly be nudging you to drop your prices and cut them a break; "Look at all the work we've given you!", they'll say. "Just do this one minor thing for us at no additional cost!" - as your employees cancel their dinner plans and fire up the coffee machine at 8 pm on a Friday . . . . . . .
posted by soundguy99 at 11:33 PM on May 29, 2015 [13 favorites]
The competition is bidding in the project yet they don't know enough about their own work to be able to figure out what is involved in a job so they can break it down for a quote? They're going to do a bang up job! I'd be SO confident in giving them my business! I would gently imply as much to the client and say tht you would love to hold your competitor's hand on this and school them in how to (build a house, boat etc). You don't normally take on apprentices but you can break down the quote for them at a cost of x rate and if they need someone to supervise you'll be charging xx.
Or they can just hire someone who knows what they're doing. You may not be as cheap, but it will be a damn sight less expensive than getting you in later to fix up their mistakes. Clearly there are polite, professional ways of phrasing this. A raised eye as you gently suggest that maybe someone who doesn't know the elements of a project to even quote on it might not be equipped to carry through said project should work wonders.
posted by Jubey at 11:43 PM on May 29, 2015 [5 favorites]
Or they can just hire someone who knows what they're doing. You may not be as cheap, but it will be a damn sight less expensive than getting you in later to fix up their mistakes. Clearly there are polite, professional ways of phrasing this. A raised eye as you gently suggest that maybe someone who doesn't know the elements of a project to even quote on it might not be equipped to carry through said project should work wonders.
posted by Jubey at 11:43 PM on May 29, 2015 [5 favorites]
They had a germ of an idea of what they wanted but in order to submit a bid, a lot of work had to be done in order to identify what their objectives were.
Doing "a lot of work" to help them identify their objectives places you in a consultant's role, which you'd be justified in charging them for. They're leaning on your expertise.
I would balk at reformatting the bid for them (at least not without an additional consultant's fee). Explain to them the bid you submitted is the bid you will stand by. Emphasize the value of what you bring to the table, and tell them they should judge your bid on its own merits. Of course, they are free to reject it. How they solicit bids from other potential vendors is not your concern (unless they want to hire you as a project manager).
In other words, I'm agreeing with soundguy's option 2 and also believe that you shouldn't be so focused on this one prospect. Your company should be marketing itself and continually seeking new opportunities.
posted by Leontine at 6:28 AM on May 30, 2015 [3 favorites]
Doing "a lot of work" to help them identify their objectives places you in a consultant's role, which you'd be justified in charging them for. They're leaning on your expertise.
I would balk at reformatting the bid for them (at least not without an additional consultant's fee). Explain to them the bid you submitted is the bid you will stand by. Emphasize the value of what you bring to the table, and tell them they should judge your bid on its own merits. Of course, they are free to reject it. How they solicit bids from other potential vendors is not your concern (unless they want to hire you as a project manager).
In other words, I'm agreeing with soundguy's option 2 and also believe that you shouldn't be so focused on this one prospect. Your company should be marketing itself and continually seeking new opportunities.
posted by Leontine at 6:28 AM on May 30, 2015 [3 favorites]
Best answer: At my employer, we'd walk away from such a client. Our bid/RFP submission/etc. is our work product and it's unethical to show it to anyone else and a big red flag to us that they'll likely screw us on the project. If a client has requirements for a project that need to be common between vendor's proposals, it's their job to write an RFP specifying that.
Another red flag for us would that the client doesn't know what they want clearly enough to write an RFP, they need to rely on a vendor to detail the project. Bad sign: "I don't know what I want, but I'll know it when I see it."
In this particular instance, the client is likely to return to you and say "those guys will do exactly this for 20% less. Match that and you'll get the job." In other words, they're using your work to haggle with you. Don't help them do that. Or they're just using the most competent vendor to act as their bid writer while looking for the lowest bid (which will obviously not be yours).
Lots of crap like this comes up, and people shrug and say "that's business". But it's business only because vendors don't walk away. My employer has gotten pretty steady at walking away from crappy clients, and as a result, we've got pretty good clients now. Maybe you can't afford to do this, but getting to the point where you don't need to tolerate crappy clients is a worthwhile goal.
posted by fatbird at 7:53 AM on May 30, 2015 [5 favorites]
Another red flag for us would that the client doesn't know what they want clearly enough to write an RFP, they need to rely on a vendor to detail the project. Bad sign: "I don't know what I want, but I'll know it when I see it."
In this particular instance, the client is likely to return to you and say "those guys will do exactly this for 20% less. Match that and you'll get the job." In other words, they're using your work to haggle with you. Don't help them do that. Or they're just using the most competent vendor to act as their bid writer while looking for the lowest bid (which will obviously not be yours).
Lots of crap like this comes up, and people shrug and say "that's business". But it's business only because vendors don't walk away. My employer has gotten pretty steady at walking away from crappy clients, and as a result, we've got pretty good clients now. Maybe you can't afford to do this, but getting to the point where you don't need to tolerate crappy clients is a worthwhile goal.
posted by fatbird at 7:53 AM on May 30, 2015 [5 favorites]
If you can't afford to walk away from this client, you're really going to be screwed when they ultimately refuse to pay the final invoice.
posted by disconnect at 8:58 PM on May 30, 2015 [3 favorites]
posted by disconnect at 8:58 PM on May 30, 2015 [3 favorites]
For what it's worth, it is very common on RFP solicitations to explicitly state that no discovery work or costs incurred for creating the bid response will be compensated. Not saying that's what happened here, but it's very common buyer practice in those environments.
That being said - It's totally shitty and unethical that they took your discovery work and used it for other solicitations if you didn't know in advance. You have every right to not like this and walk away. The question is: can you afford to? Because justice will not be done here. Ever.
This behavior is extremely common in my field - IT/telecom. I have had potential clients show me competitor's bids, and I know mine have been shown to others. My experience has taught me that about 50% of the time, the client was just clueless and didn't realize that doing this wasn't cool, and the other 50% simply didn't care and just wanted the best price.
There's an overlapping subset that likes to play competitors off against each other, too, thinking that they're being good little capitalists.
Walk away from this if you can, but suck it up if you can't, because this is not the last time this will happen.
posted by Thistledown at 6:31 AM on May 31, 2015 [1 favorite]
That being said - It's totally shitty and unethical that they took your discovery work and used it for other solicitations if you didn't know in advance. You have every right to not like this and walk away. The question is: can you afford to? Because justice will not be done here. Ever.
This behavior is extremely common in my field - IT/telecom. I have had potential clients show me competitor's bids, and I know mine have been shown to others. My experience has taught me that about 50% of the time, the client was just clueless and didn't realize that doing this wasn't cool, and the other 50% simply didn't care and just wanted the best price.
There's an overlapping subset that likes to play competitors off against each other, too, thinking that they're being good little capitalists.
Walk away from this if you can, but suck it up if you can't, because this is not the last time this will happen.
posted by Thistledown at 6:31 AM on May 31, 2015 [1 favorite]
This thread is closed to new comments.
posted by easily confused at 6:43 PM on May 29, 2015 [5 favorites]