Competing Against Low-Bid Contractors
JUPITER, FL – June, 2018 – When spray foam prices in your area are real low and it’s hard to make money, this is what you can do to help yourself out.
Analyze the Situation
Find out why or how the other contractor(s) is bidding so low. It is possible for a small contractor with a low overhead to apply foam cheaper than a larger contractor and still make a reasonable profit.
But, more often a chronic low bidder is taking some shortcuts to get the price down. Check out whether they have insurance and how much. Do they spray less foam than the specification calls for? Are they just working for wages and not saving money for overhead and equipment maintenance? Do they cut corners on safety and health practices?
Perform a self-analysis on your company’s strengths and weaknesses. See how you match up against your low-bid competitor. If you have better quality and provide more professional services then you can point out those differences to
a prospective client.
Rigs that are professionally painted with certifications and membership of organizations and are neat and clean inside confirm the quality of the company.
Build a Reputation for Better Quality and Service
Most folks will buy a higher priced product or service if they perceive a better quality and value in the product. For example, you would expect to pay a significantly higher price for a new Mercedes sports car over a Yugo. A savvy customer will know that too low a price can result in a poor application.
There are customers who are always looking for a deal and the lowest price. A contractor can go out of business catering to that clientele. Establish your company’s focus away from the low-bid client towards one that wants the best quality and is willing to pay a premium for the service.
Spray foam is already considered a premium product in the prospective customer’s mind, so half of your work is already done. A typical spray foam job is more than double what a fiberglass insulation job would cost. So, a prospective customer is likely to buy up rather than down.There are a number of ways to create a favorable impression on a prospective customer that would allow you to charge more than the overall marketplace.
Join a trade group. By becoming a member and participating in trade groups such as Spray Polyurethane Foam Alliance (SPFA), Insulation Contractors Association of America (ICAA), National Roofing Contractors Association (NRCA) or Air Barriers of Association of America (ABAA), you are able to stay up to date with the latest products and applications, thereby demonstrating to your prospective customer a desire to contribute to better overall quality in your industry.
Messy foam rigs indicate the applicators can’t keep their foam equipment running well.
Provide your workers with the best training and education available. Take advantage of training and educational courses offered within your industry. Educational courses offered by suppliers, trade groups, and third-party consultants can not only provide your workers with knowledge of industry best practices, but also gives your customer peace of mind that they have the skills necessary to do the job right.
Learn to spray great looking foam. Foam application is an art and it requires skill to obtain a uniform and smooth look. You can charge a premium if your applicators can spray better-looking foam than your competitors. Also, by spraying right, you use less foam, which means keeping more money in your pocket.
Keep the jobsite and the foam rig clean and neat. Customers tend to perceive clean jobsites and equipment with a good quality application and conversely a messy job site tends to be associated with poor quality.
Protect items from overspray. Many contractors don’t mask off items in attics and crawl spaces such as HVAC equipment, water heaters, ductwork, flooring, etc. Mask off everything in the area that overspray can get on. A great way to emphasize this to your customer is to note it in your bid as
a separate line item.
What the spray foam application should ideally look like: Smooth, uniform, with a neat cut line at sill plate, and with little or no overspray on the equipment.
Develop effective quality control and inspection procedures. Keep good job records, take quality control samples during application, and have a final quality assurance inspection by your own folks before the final walk thru with your customer.
Advertise your company’s strengths. Emphasize the list of topics above in your brochures, website, trade shows, seminars, lunches, etc. Use these opportunities to place your company at the head of the class. Educate the public on what to look for in a quality application. Be sure to include photos and job references of the good work you have done. Have your rig painted by professionals and make sure you have company certifications and trade group affiliations on it.
Rough foam causes clients to wonder about quality, and contractors lose money by spraying too much foam.
Work in Different Markets
Sometimes a specific market place is so crowded that there just isn’t enough work to go around and even companies performing good work start bidding low. In those cases, you need to broaden your business scope.
Find industries the low-bid applicator doesn’t work in. For example, if the low-bid player is in residential insulation markets, then find other markets in your area that use or could use foam. Here are some examples:
Cold storage—Produce storage (citrus, vegetables, fruit), meat packing plants, supermarket warehouses, and agricultural buildings
Fiberglass fabrication—Boats, hot tubs, spas, tanks, and pipes
Fishing Industry—Fishing, crab and shrimp boats, processing facilities, warehouses, offshore storage and processing plants
Metal fabrication—Tanks, pipes, vessels, etc.
Masking equipment is crucial for overspray damage protection.
Most of these industries negotiate prices with a limited number of contractors who know how to perform the work properly, so you typically can charge a little more.
In conclusion, think of extras that your company can offer your client such as blower door measurements before and after the application to demonstrate the amount of air sealing the foam provides. The more you separate your services from competitors the more you can charge for the job.