1. Do you have the right bidding structure?
The traditional RFP process is at its core meant to standardize the requirements by which vendors present their pricing. While this can give you more control and bargaining power, it can also limit the true value that can be gained through the engagement from operational expertise.
Pricing in the service industry is largely structured as time-plus-margin. So, from the vendor's perspective, it would make more sense to try to include as much time as possible in order to improve profitability. As a client, how can you receive standards of quality when you're buying time?
2. What should pricing be based on?
Proving outcomes is tricky, especially when compensation is based on time. However, with the availability of data and better metrics, there are many new creative ways businesses are compensating performance.
Instead of the traditional time-plus-margin pricing structure, you might want to seek out facility maintenance vendors with some of these more creative structures. These could include payment plans based on performance and/or results that first offer free trials of their services.
This type of pricing based on performance can act as insurance, ensuring the vendor doesn’t under or overcharge your organization. According to the Harvard Business School: Performance-based pricing is growing because:
1) The economic logic is so powerful.
2) It provides new opportunities for buyer/seller communication.
3) It has been proven in practice.
3. What are some internal practices that allow a service company to offer more value?
It’s important to understand the internal practices a vendor could have that would allow them to offer your organization even more value.
Value can come from many places that are consequential to the service. Reduced customer attrition, reduced management burden, reduced re-servicing, and increased sales/referrals are a few of the ways in which vendors can provide their customers with even more value.
You don’t want any run-of-the-mill facility maintenance vendor for your organization, you want a business partner that cares as much about your performance as they do their own. You want a vendor that goes above and beyond what’s expected of them, a company that won’t just make your life easier, but will provide true value for your business.
Contact Us to find out the value you get by picking Encompass.