46 BUSINESS FEATURE: SELLING ON VALUE, NOT PRICE
Healthy competition? As price becomes the differentiating factor in more and more project wins, Duncan Proctor looks at what integrators and distributors can do to stop the tendering process becoming a price comparison exercise at the expense of value
n Installation’s regular surveys of countries’ installed AV communities, a common grievance expressed is that customers often think primarily of the cost of projects rather than assessing the value they are getting. This creates issues with price undercutting and can distort the market with some integrators and distributors believing they have to offer the lowest price option to win a project, which in the long run brings down standards and often results in the system installed being unable to fulﬁl the brief. Competitive pricing and cutting of margins in the pursuit of business is nothing new to the AV industry, but lowering the price of a solution does not correlate to better value to the customer. How does the industry guard against this approach becoming pervasive? “Pricing is and always will be an issue in our marketplace. Cutting margins to win business per se, is all part of the free market economy AV integrators work in and a challenge that those of us who provide high quality, value-rich services to our customers have to face on a regular basis,” says Peter Sutton, managing director at Pure AV.
Flawed process This problem is exacerbated when combined with a ﬂawed tender process that does not allow for bidding companies to demonstrate the extra value they can offer. “This is most often the case when procurement decisions are driven by remote purchasing departments perhaps at main contractor level or taken without consideration of the end-user experience or
‘“Value for money” can be confused with “race to the bottom”’ John Ginty, Sahara
input of the teams on the ground and who will ultimately work alongside the tendering parties on the delivery of the project,” states Sutton. “The whole process of AV project tendering is a mineﬁeld,” conﬁrms Colin Etchells, director and group technical manager at Saville.
Key Points Undercutting risks the long-term health of the industry in exchange for short-term gain The tender process currently prizes cost above important factors that contribute towards the value of a proposal Competent integrators and distributors can still win business, but need to focus on adding value and resist the urge to overstretch its resources “Unfortunately, this can be made worse by tenders, which are clearly issued as price comparison exercises to test the market and others where the procurement process dictates that there should be a minimum number of returns to assess before the contract is awarded. Then there are those that are issued as part of a bigger contract, namely construction projects, where the tender is a small part of an overall proposal.” John Ginty, general sales manager for Sahara, is in agreement: “‘Value for money’ can be
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