The fire alarm market holds incredible potential for installers – especially if they know where to look. For years, I’ve heard people in the industry debate about the merits of bid work and negotiated work, and why one is better than the other. In reality, they’re two sides of the same coin, and if you leverage them both effectively, your business will reap incredible benefits regardless of the strength of the construction market.
What is Bid Work?
Bid work refers to projects that are contracted out and awarded through the bid process, most often as a building is being designed and built. The project’s engineers and architects bid mechanical and electrical work out to a general contractor, who then breaks up the work into individual systems. This might include plumbing, electrical, framing, etc. The electrical contractor usually contracts with a fire alarm contractor (dealer) to handle that specific system.
Bid work entails very detailed plans and is typically awarded to the lowest qualified bid. For dealers who are new to the fire alarm market, the bid process can be a fantastic way to establish yourself in the industry.
What is Negotiated Work?
On the other hand, negotiated work typically comes from an dealer’s existing customer base. When a contractor is working on a project that has a need for a new system or technology updates, he or she can reach out to dealers directly and negotiate the specifications and price for the system. Also, dealer may have a direct relationship with the end user due to service and maintenance work. That relationship can yield opportunities for negotiated work.
Negotiated work is often a result of an installer’s previous work experience – and the trusted relationships he or she has built with customers. If you do high-quality work and maintain your relationships with your customers, they are more likely to reach out to you directly when they need a new fire alarm or security system.
Striking a Balance
Rather than opting for one or the other, the key to achieving long-term business growth lies in striking a balance between bid work and negotiated work. Ideally, you won’t be overly focused on bid or negotiated work and instead establish multiple ways to go to market. Why? Because the construction market can be unpredictable.
When the construction market is doing well, the bid market can be a source of continual work, as well as a great way to build your installation base. But when the construction market is down, and there aren’t a lot of projects going to bid, negotiated work can help bridge the gap. It’s somewhat cyclical: Once you’ve established yourself in the bid market, over time you’ll create relationships with your customers that will lead to additional negotiated work. Then, you can look to your established customers and leverage the relationships you’ve built over time to find additional opportunities for upgrades, retrofits or alterations.
Whether you’re currently playing in the bid market or negotiated market, at Honeywell we always reiterate these three keys to success:
- Differentiate yourself.
- Educate your customers.
- And build on those relationships.
Armed with these goals, you’ll position yourself for success, now and for years to come.
Be sure to look for Parts 2 and 3 of this blog series, where we’ll look at the pros and cons of both bid work and negotiated work.
About the Author
Julie Laudano is a Pricing and Marketing Analyst for Honeywell Fire Systems. Her role involves monitoring economic indicators, strategic pricing, the bid market and industry sales trends to help identify new growth opportunities. She has been with Honeywell for 11 years.