Our general practice is if we are responding to a bid/spec we will not line item or give unit pricing if it isnt required in the bid document.
If we are working directly with a customer we will always line item. Sometimes when we line item we will not provide unit pricing, and we might not include part numbers, just descriptions and a total price. Other customers we have to provide everything for state contract audit purposes.
Although (integrators want to minimize their quotes be shopped or picked apart) I feel it does an injustice to our customers (end Users) if the equipment is not done with a line item parts breakdown.
How is a customer to know what they are buying - would you buy a car sight unseen if the sales guy/invoice said:
- 1 Red 4 door Automobile, Black Interior
- 4 Tires, 4 doors, Drivers Air Bag & Gas Tank
- Estimated 25 MPG
- Total Cost = $14,975
This is as bad as most proposals I have seen. Although, I am an integrator I feel that the customer has a right to know exactly what they are getting for the money they are spending.
Integrators (including me) are hesitant to provide line item pricing unless it is required, especially when many of the items, for example Axis cameras, are sold online. It's the internet age, and everyone compares prices online. It's gone as far where I've had customers e-mail me links to eBay auctions for NOS (new old stock) and insist on getting that price. This is where Avigilon has an advantage.
Putting too much detail on a proposal makes it easier for the customer to hand a copy of your proposal to a competitor for another price. It sucks putting hours into doing a site survey, analysis and preliminary layout just to have the customer hand over that investment to someone else who undercuts you on price.
If an integrator is using quality equipment they should list the manufacturer and model numbers. Too often when no details are given, it's usually junk equipment.
Generally I list the manufacturer and model of the equipment being used, a few paragraphs on the implementation and scope of work and a one-line total price. For established customers that I have a relationship with, I will list unit pricing when requested.
Not only do we disclose part numbers and price but we also disclose markup % and hourly rate beforehand. We then write our solution comments and why we selected the equipment quoted fir the application in question. Clients then can read and understand why this particular solution was offered. Granted, this approach us nit 100% successful but the client knows that we are suggesting a reasonable price with the right solution for their application.
Joseph, Undisclosed, Richard, some very good insights! thanks!
Richard, I've never heard of that approach before, but I like it!
I just finished writing an article for our newsletter addressing this exact topic. As an end-user or anyone required to review propsals, line item pricing and detialed proposals are a must, otherwise there is no way an educated decision can be made. It is also very easy for integrators to hide costs and lower quality solutions within line item quotes. When Safer Places is asked to review proposals, we like to see unit prices, labor calculations, etc.. However, if a solid specification was not used and the bidders submit different solutions, it will still be very difficult for an end-user to make a decision. Combine a lump sum proposal with a very vague or non-existent scope of work and you have a recipe for unmet expectations and an un-happy client.
I can certainly respect an integrator's concern about providing too much detail, but the reality is, if the customer is going to shop your number, you did not have the relationship or a shot at the job in the first place. My feeling is this. If you are bidding competivily and have a good solution, you should not be afraid to provide the details. As an account executive for a Boston based security integrator for twelve years, I was very successful and attrribute that to being fair and honest with prospects and providing that extra detail in our proposals.
From an installer or integrators standpoint, it's a very fine balancing act of providing just enough information to let the customer know what they're getting but not giving away too much information for them to shop it. Because really, what are you buying from me? I'm not a box store or online store, there are plenty of shops for that. You're buying service, my expertise and my labor. Would you appreciate me knowing exactly how much you really had and were willing to spend? Why are you asking my profit margin on equipment? Why are you making an issue about my per hour labor rate being 3 to 5 times what you make in an hour, and giving no thought to my overhead and expenses of staff. You come to be for a package solution, not the cheapest price for a six pack, Miller Genuine Draft, 12 ounce bottles.
I'll give enough detail so you know what brand you're getting on the major components so you know it's not cheap junk from Asia, but not so much so you can easily check eBay and Amazon for the parts and then Craiglist for the cheapest rent-a-drunk. For labor and expertise, I'll give you my credentials and references.
Usually it's not an issue for customers who are educated on value or those you can educate. And I admit I've seen some quotes that were pretty ambiguous. But those customers that want part and model numbers on everything and every little detail line itemed, who is not needing it for a bid (that's really a different animal), are the ones who will always find and go with what they think is the cheapest way (usually not you, even though an expert would know its not the best way), so why bother.
IPVMU Certified | 01/03/14 05:02pm
In the federal market space, even relationship isn't enough. If you offer too much information, it can and will be used against you when the requirement is "posted for bid".
If you have met with the customer, if you have done a proper review of the proposal, a description of the products and a brief of the SOW is all that should be offered. When their contracting shop puts the requirement out for bid, then offer ALL the details with part numbers and complete SOW description. Your customer knows what they are looking for because you helped them with the vision.
I've not thought the angle of small time customers where giving a project scope and a one line price to show this is what you pay for. As a big end user, we drive for line item pricing for many reasons. The more obvious is doing checks against other bids. We want to know if we are comparing apples with apples. However the danger is where some purchasers tend to use the line item pricing as a way to favor one supplier over another which I do not condone at all. We require value partners to work with us and when they do we use the line item pricing as a bonus. If the supplire is able to do part of the installation and we can check it off, we can partially pay, but if it is one line item and price then tough, they will not see their money till the job is done and to satistifaction.
IPVMU Certified | 01/03/14 05:13pm
Any part or labor item in our proposals has a seperate line item. We do not have a standard practice of giving a price breakdown on our proposals unless requested by the customer. Our equipment line items include the product manufacturer and the main details that the manufacturer provides which is enough information for a customer to do a comparison to another integrators proposal. If more is requested or necessary we will attach manufacturer specification sheets for the customer.
I have gathered many competitors proposals from our area lately and have seen a new trend of detailing out the materials and labor used but showing a lump sump of each of the amounts. For example a $15,000 job may have the equipment detailed out with a price of $12,000 and the labor listed at $3,000. I believe the angle is they are providing solutions for a customer rather than numerous pieces of equipment and would like to present it as that.
These are all valid points, but the client is not going to find technical expertise on eBay when it comes to type of lenses to use, FOV requirents, lighting issues, etc ... Professionals, with a fair price and solution oriented approach, will not find it difficult to gain the trust of a client if they know how to explain the suggested solution, and why is the right one for that particular application. If the client goes somewhere else, at the end , he is going to remember your approach and reach out to you in the future. I build relationship based on trust and expertise, 90% of the time it works for me. I approach clients to gain their business for long term, and not a one job rip off. This works for me, but I understand that it may not work for the Big Boys.
One advantage, we have as consultants is the ability to vet out the integrators we select. I have vendor profile for all bidders that have or will bid on our projects. This allows us to select the best integrators for a specific product/solution, as well as match up three bidders of similar size and qualifications. It will also weed out the low-end integrators and keep the bid process fair for all bidders. I can honestly say that every reputable bidder I have approached for our projects have had no problem disclosing unit sell prices (not costs - I am not interested in the mark-up), labor rates, hourly rates, etc.
Yes design builds vs. an RFP are very different. That is were your sales team and engineers needs to step up. If you cannot get in front of them to educate them on your product selection or spend the extra time bring the products to them for on-site demonstrations, your closing ratio will certainly drop. Sending datasheets si not enough. The low-end product datasheet do a great job claiming to be equal to their higher prices competitors on paper, but usually fall short in a real world installation. People will argue that decisions are made on price rather than relationships. That may be true in some cases, but if you have the relationship with the end-user, they usually give their favored integrator last look (this obviously should exclude public bids, etc.). It's not what you want to hear as an integrator, but unfortunately has happened to the best of us.
Yes - Some customers will shop the internet, but if you've been in the industry long enough, you know how to best address that. With some customers you cannot. That is when you have to detrermine if this is the right customer for your company. Can you make enough margin on their projects or should you focus your resources elswhere. It is very hard for an account rep to know when to walk away from an account. I have had those discussions myself. Some of the most successful integrators out there are successful, not because of the volume they sell. They have become experts on knowing what jobs they want and do not want. They are being more selective, which increases their closing ratio and profit margins.
It seems to me that with the onset of IP based systems, these manufactures go to market offering much smaller margins to the integrators. Back in the day we all remember having costs from companies like Pelco, American Dynamics, Bosch, etc. that usually allowed a full mark-up without exceeding their suggested MSRP. Most of the IP manufacturers today seem have a much smaller cap between cost and MSRP. It is certainly getting harder and harder for an integrator to maintain fair profit margins these days.
I certainly do my best to provide god pricing to my clients while understanding that the integrator needs to make money as well. I want my customer happy and the selected integrator happy. If those two things existing, then I am happy.
Let me clarify. I only want to see a unit sell price, not to determine your costs, but to understand the value of each component in the system. This may assist with budgetary costs for additions or revisions. I have also found pricing mistakes made by the integtrator that would have cost them money if I did not question them. Yes, beleive it or not, the detail can work in favor of the integrator.
I'll end with this. It's an incredibly competitive market these days with more and more integrators joining the flock. Not to mention the data companies and electrical companies taking a shot at it and competing for the same market share. I sincerely feel for those integraters that continually invest in their employees, training, and technology. You are invested in the industry, work hard and deserve the work.
There will most likely never be a overall agreement to this discussion and it is very informative for me to see the perspective of others. I enjoy working with integrators and work hard to generate RFP packages that they want to participate in and addresses most of the above concerns.
Dont get me wrong here and I do state I am a customer, not an integrator or reseller. I don't expect to see breakdown of buying price and markup. I only want to see the part reference of the composite item and a unit price that it will be solde to me for. At the end I expect to see estimated labor if its a quote and any other charges such as project fees, taxes, licenses whatever. It would be rude of me to ask for an integrators bying price, the integrator/reseller has to make a living as well.
On top of this, for those customers who decide on using the internet as a compettitive store then they do so at their own expense and will lose any value of the total service solution and ongoing backup and support. Buying off the shelf without any support will most likely come back to bite them later.
With aaS taking up more and more space these days, I'd say it's applying a double standard to enforce a line by line/price per item policy. Being able to understand what you're getting for what you pay is obviously important, but is how much you are paying for each component and each type of labour charge really that important as long as you feel you're getting a fair shake?
I like the idea of breaking the items out, with a total price. But not an invidivual line and price for each item. I think the customer deserves to know what they are gettign ahead of time, but doesn't neccesarily need each individual price.
Knowing what you're getting can help you compare apples to apples, sometimes we shoot ourselves in the foot by being as vague as possible on the quote, and then wonder why the customer can't just believe us when we tell them we're doing it better than the competitor. They really can't know when they don't even know what is being provided.
Anyone can beat a number. The customers needs to be fully educated on what you are offering with an explanation of each lime item if necessary.
IPVMU Certified | 01/05/14 07:06pm
John do you have information regarding the votes being gathered? Since all aspects of this site are open to end users, manufacturers and integrators I am curious to know where the votes being cast came from. For example are the yes votes primarily end users, integrators or mixed? Same with the no votes are those from integrators or end users?
As an integrator we do line item quotes including project management, Device programming and Auto CAD. On rare occasions we will get push back as to why are you charging us for those items. Our answer is we like to inform you the customer where other costs are and show the value items that are a part of the project being proposed. Other vendors may hide these items but we do not this will show the customer how the overall cost is derived and how we value certain aspects of the project.
I once reviewed a quote that initially seemed to be out of line with 4 quotes from other vendors. I then went back and asked each vendor to resubmit the quote detailing the cost of each item, including cameras, boxes, connections, wiring, etc. I found the problem with the out of line quote. The wiring cost was 10,000 higher than anyone else. When I questioned the vendor, he admitted that someone had added an extra zero by mistake. This was a reputable vendor who had done other work and I was familiar with their end result.
Good point, sometimes because we breakout all our pricing on a line item spread-sheet, this will alert the end-user reviewing other bids that other bidders may have missed an item or not provided costing for as builts or their training hours were not comensurate with what was required, or a line item may seem high and requires further explaination such as programming. Upon explaination aspects of programming may not be required or may be required but not anticipated by the other bidders.
I am interested to know if there is preferred estimating software used by integrators? does this make it easier to provide breakdown of pricing?
NOTICE: This comment has been moved to its own discussion: What Estimating Software Should Integrators Use?
With so many choices of models, brands and technologies available for CCTV today, it is essential distributors and integrators itemise quotations and provide product data sheets to clearly detail what is being provided. They should also clearly explain what recording parameters their design provides for with an indication of the target recording duration. Yesterday I was sent a quotation from a customer they received from an integrator that simply listed a Hikvision 16 channel DVR without any model number or indication of HDD capacity. Hikvision have countless models to choose from which vary in performances and HDD capacity. A few months ago an integrator contacted me about a project with 60 x HD IP cameras requiring 90 days continuous recording. One distributor proposed a 1080p solution factoring storage and bandwidth calculations on the basis of average file sizes of 20KB per image while another distributor based their design on 60KB. Vague quotations are generally a warning sign the provider is lacking in knowledge or has something to hide. It makes it difficult to compare "apples with apples" and more importantly know what outcomes to expect from the proposal. The dilema for professional distributors and integrators is that some customers will shop their design around to screw them on price.
IPVMU Certified | 01/08/14 01:59am
I generally list only the total cost for the project unless required to provide a more detailed breakdown. If the project is small I may detail the items especially when I know the internet price is much more than my cost. I do detail model numbers and quantities of products included so the customer knows what they are getting. If I need to convince the design to someone, I may do a 3D sketch to include in the proposal to show what the end project will look like. I do audio/video in addition to CCTV so that is the reason behind a 3D model.
I did have a client asked for a pricing breakdown on a project. I asked why they requested this because I was curious. They quickly explained that they needed a breakdown so they could pick and choose what they were going to include in the project. The problem with this was an unqualified technical person that handled the money was going to attempt to redesign my quote to fit a budget. It wasn't to shop around. I did as requested, nothing was cut, and the project was completed as quoted.
I like to include enough detail where I don't provide all details but give enough for myself and the client to have something to discuss and negotiate on.