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  1. Thread Author  Thread Author    #1  

    Default Capitalism and Competitive Pricing

    Competitive pricing should always keep pricing low in a capitalist society, but you really have to practice it or else you can end up on the short end of a stick. Here's what happened to me.

    I have central air in my house. My outside unit is 23 years old. My air conditioner isn't working so I made a service call. The technician came out and showed me my outside unit was shot. He fills out the paperwork and gave me an estimate of $4200 to have it replaced, along with the inside coil. I asked him if that was a good price and he said, as far I know, I am not a salesperson and I just follow this chart the shop gives me. I said that's fair.

    So I call another outfit to get an estimate. A salesperson comes out and gives me an estimate of $4500 and wants me to immediately sign a contract. I then told him that I was going to get 4 to 5 competitive bids. That's when the fun starts. He then demanded to know who else had given me a bid and how much it was and said he can't give me a better price unless he knows what the other bids are. I kept telling him, just give me your best competitive price. After about 10 minutes of going back and forth, I told him I have your bid and I'll let you know. I thought I was going to have to pick him up and throw him out of my house.

    Next the first outfit that I did the service call through had a salesperson call me and asked when I wanted to get the work done. I told him I am getting 4 to 5 competitive bids and asked if $4200 was his best price. He said he would call me back. Ten minutes later he calls me back with a price of $3800 ($400 savings)

    Then I called a 3rd outfit to get an estimate. A salesperson comes out and gives me an estimate of $4400 and tells me he can have it installed tomorrow. I then told him the same thing, that I was going to get 4 to 5 competitive bids. He asked who else I had an estimate from and how much it was. I told him just give me your best competitive price. Then he confesses and says, you know what, we're really slow and if we have to get some work, so let me call my boss, I am getting real tired of this. He makes a couple calls and his bid drops to $3500 ($900 savings)

    Moral of the story is, always get competitive bids or else capitalism doesn't work like it is suppose too.
    Last edited by palandri; 05-13-2014 at 02:00 PM.
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  2. #2  

    Default Re: Capitalism and Competitive Pricing

    You are better off doing it this way and going with the $3500 bid then calling "company 1" back and telling them the lowest. If they come in lower, I'd watch the quality of the work.
  3. #3  

    Default Re: Capitalism and Competitive Pricing

    Quote Originally Posted by SteveISU View Post
    You are better off doing it this way and going with the $3500 bid then calling "company 1" back and telling them the lowest. If they come in lower, I'd watch the quality of the work.
    That's definitely something to watch. The boneheads that installed my A/C unit installed it incorrectly, didn't replace the outside concrete slab that the outside unit sits on (the unit hangs off about 6"), and during cold winters, the wiring burns up because the boneheads that installed it did weren't supposed to install copper wiring to my aluminum wired house.

    Watch those guys like a hawk and save all warranty paperwork.
    palandri likes this.
  4. Thread Author  Thread Author    #4  

    Default Re: Capitalism and Competitive Pricing

    Quote Originally Posted by TXGTOU View Post
    That's definitely something to watch. The boneheads that installed my A/C unit installed it incorrectly, didn't replace the outside concrete slab that the outside unit sits on (the unit hangs off about 6"), and during cold winters, the wiring burns up because the boneheads that installed it did weren't supposed to install copper wiring to my aluminum wired house.

    Watch those guys like a hawk and save all warranty paperwork.
    http://www.cpsc.gov//PageFiles/118856/516.pdf
  5. #5  
    NoYankees44's Avatar

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    Default Re: Capitalism and Competitive Pricing

    Good advice.


    Fun facts:
    Part of my job is getting jobs done, equipment made, etc, so of course I have to go through and get bids for anything I am contracting out. In industry, it is actually illegal for competing companies to discuss pricing it each other or for the contracting person to tell the companies what the others' bid before the company bids themselves. All these rules are an effort to keep price fixing and unfair practices from going on.

    I am pretty sure an individual can go between people and tell bids without risk though because it does not effect an end customer. However I am sure it is highly illegal for competing companies to discuss with each other before bidding.
    Galaxy S3(unlocked on whatever I feel like flashing) ---- Asus Tf300(unlocked on CROMI)
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  6. Thread Author  Thread Author    #6  

    Default Re: Capitalism and Competitive Pricing

    Quote Originally Posted by NoYankees44 View Post
    Good advice.


    Fun facts:
    Part of my job is getting jobs done, equipment made, etc, so of course I have to go through and get bids for anything I am contracting out. In industry, it is actually illegal for competing companies to discuss pricing it each other or for the contracting person to tell the companies what the others' bid before the company bids themselves. All these rules are an effort to keep price fixing and unfair practices from going on.

    I am pretty sure an individual can go between people and tell bids without risk though because it does not effect an end customer. However I am sure it is highly illegal for competing companies to discuss with each other before bidding.
    I knew you would like this thread. I am trying to get capitalism to work the way it's suppose to work, and it doesn't necessarily work that way automatically. If nobody knew any better, they'll end up paying a lot more than they need to.
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  7. #7  
    NoYankees44's Avatar

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    Default Re: Capitalism and Competitive Pricing

    Quote Originally Posted by palandri View Post
    I knew you would like this thread. I am trying to get capitalism to work the way it's suppose to work, and it doesn't necessarily work that way automatically. If nobody knew any better, they'll end up paying a lot more than they need to.
    You are correct. The most important part of capitalism is educated consumers that are willing to shop for price/quality. If everyone just goes to the first store they see or first company they price, capitalism can never work as intended. Prices will inflate and quality will suffer because the consumer is not doing their part.

    This is one of the main reasons capitalism is failing in some respects in this country. People are not willing to shop and price, then they complain about the state of the economy. If the market is not allowed to work properly, the full benefits of the system will never be realized.

    As you found, there are large benefits for those willing to put in the effort. If everyone put in the effort, the benefits could be even greater.
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  8. #8  

    Default Re: Capitalism and Competitive Pricing

    Quote Originally Posted by palandri View Post
    lol, I know but I'm not ready to take on that endeavor just yet. Technically, the A/C company wasn't supposed to install my A/C until I had the house re-wired correctly.
    palandri likes this.
  9. Thread Author  Thread Author    #9  

    Default Re: Capitalism and Competitive Pricing

    Quote Originally Posted by TXGTOU View Post
    lol, I know but I'm not ready to take on that endeavor just yet. Technically, the A/C company wasn't supposed to install my A/C until I had the house re-wired correctly.
    Years ago I knew a guy that worked for Illinois Bell who told me the story about the summer Illinois Bell experimented with aluminum wire. Everything was fine until winter hit and then all of the connections opened. Thousands of homes and businesses with no service.
  10. #10  

    Default Re: Capitalism and Competitive Pricing

    Something have learned the hard way is that paying the most doesn't mean that you are getting the best service and similarly, paying the least doesn't mean that you are getting bad service. Also, thoroughly read the contract before signing. It is possible that some unscrupulous people give a low price with exclusions, and those exclusions could cost you more in the long run.

    But more importantly than price, I would suggest talking to your family and friends, perhaps they have a recommendation.

    Finally, good luck!

    dpham00, Android Central Moderator
    Sent from my Verizon Samsung Galaxy Note 3
  11. #11  

    Default Re: Capitalism and Competitive Pricing

    Quote Originally Posted by dpham00 View Post
    Something have learned the hard way is that paying the most doesn't mean that you are getting the best service and similarly, paying the least doesn't mean that you are getting bad service. Also, thoroughly read the contract before signing. It is possible that some unscrupulous people give a low price with exclusions, and those exclusions could cost you more in the long run.

    But more importantly than price, I would suggest talking to your family and friends, perhaps they have a recommendation.

    Finally, good luck!

    dpham00, Android Central Moderator
    Sent from my Verizon Samsung Galaxy Note 3
    Good point. If I were in his shoes, I'd go with the company that provided the lowest bid right out of the gate. The company that dropped their price AFTER he said he had a lower price, they seem a little too cut throat and may very well cut some corners to cut their costs.

    When my parents had their home built, they went with the lowest bidder and he was extremely shady. The house isn't even 12 years old and there are already cracks all over (from the foundation) and they've already had to replace 2 toilets, the tile in the kitchen, and are looking at replacing both A/C units. Not exactly the bargain they had hoped for.
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  12. #12  

    Default Re: Capitalism and Competitive Pricing

    Quote Originally Posted by TXGTOU View Post
    Good point. If I were in his shoes, I'd go with the company that provided the lowest bid right out of the gate. The company that dropped their price AFTER he said he had a lower price, they seem a little too cut throat and may very well cut some corners to cut their costs.

    When my parents had their home built, they went with the lowest bidder and he was extremely shady. The house isn't even 12 years old and there are already cracks all over (from the foundation) and they've already had to replace 2 toilets, the tile in the kitchen, and are looking at replacing both A/C units. Not exactly the bargain they had hoped for.
    When building a new house, you need to do research, get a good quality ac unit and furnace, copper pipes, double insulating windows (if you are in an area that gets hot or cold, probably other things.

    Hiring an independent inspector might be worth too, or honestly, just showing up often to check up on the progress. And by showing up, mean really checking, taking pictures. When a shady contractor sees this, he would be more inclined to do a good job.

    Foundation is more tricky as they need to compact the dirt properly or if material is bad then they would need to over excavate and bring in good soil. Then get the proper concrete mix and correct rebars.

    dpham00, Android Central Moderator
    Sent from my Verizon Samsung Galaxy Note 3
  13. #13  

    Default Re: Capitalism and Competitive Pricing

    My biggest concern is that I hope you made sure to use only unionised companies while searching for quotes. I would hate to think that you got the best price because the company is screwing over it's workers.
  14. #14  

    Default Re: Capitalism and Competitive Pricing

    Something that needs to be mention.

    The problem with competitive pricing is that it assumes all services provided is of the same quality.

    I have a client who opened up a second location. When they build up the 2nd location they went with a different electrician and security service provider to save costs.

    The first location cost around 90K, the 2nd location cost around 60k.

    To make a long story short.

    Failed inspections and the equipment not performing like the first location does has caused several issues.

    After hiccups and other delays, the owner of the company has told me next location open will go back to the original security/electrician company.

    TLDR Version.

    Nothing wrong with going with cheaper, but make sure it doesn't bite you in the ****.
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  15. #15  

    Default Re: Capitalism and Competitive Pricing

    Quote Originally Posted by Farish View Post
    Something that needs to be mention.

    The problem with competitive pricing is that it assumes all services provided is of the same quality.

    I have a client who opened up a second location. When they build up the 2nd location they went with a different electrician and security service provider to save costs.

    The first location cost around 90K, the 2nd location cost around 60k.

    To make a long story short.

    Failed inspections and the equipment not performing like the first location does has caused several issues.

    After hiccups and other delays, the owner of the company has told me next location open will go back to the original security/electrician company.

    TLDR Version.

    Nothing wrong with going with cheaper, but make sure it doesn't bite you in the ****.
    Keep in mind that even paying a lot doesn't necessarily indicate good quality.

    dpham00, Android Central Moderator
    Sent from my Verizon Samsung Galaxy Note 3
  16. #16  

    Default Re: Capitalism and Competitive Pricing

    Quote Originally Posted by SteveISU View Post
    You are better off doing it this way and going with the $3500 bid then calling "company 1" back and telling them the lowest. If they come in lower, I'd watch the quality of the work.

    Just a word of warning that bid shopping is consider unethical and a very fast way to **** off contractors. Now for a home owner not as a big of a deal as chances are you do so little work you would not gain the reputation but if you are a contractor that is a fast and I mean FAST way to **** off subs and they will start inflating the prices. Also always remember that the companies do talk. They may not share current bids but they do talk about who they are working with and what problems.
    They also generally know who else is bidding on a job as they do talk. They may not know the bid but they tend to know who they are competing against.
    Until proven otherwise the so called "Google Update Alliances" is dead and was just empty promises and words. One has to look no father than the pathetic and slow update process of ICS on all the manufactures and carriers. We should all be asking the question about updates and the so called Update Alliances ever chance we get.
  17. #17  

    Default Re: Capitalism and Competitive Pricing

    Quote Originally Posted by Timelessblur View Post
    Just a word of warning that bid shopping is consider unethical and a very fast way to **** off contractors. Now for a home owner not as a big of a deal as chances are you do so little work you would not gain the reputation but if you are a contractor that is a fast and I mean FAST way to **** off subs and they will start inflating the prices. Also always remember that the companies do talk. They may not share current bids but they do talk about who they are working with and what problems.
    They also generally know who else is bidding on a job as they do talk. They may not know the bid but they tend to know who they are competing against.

    I think he's a consumer, not a contractor.
  18. #18  

    Default Re: Capitalism and Competitive Pricing

    Quote Originally Posted by SteveISU View Post
    I think he's a consumer, not a contractor.
    True but even then it falls under the unethical category. And it can get you put on a list you rather not on.


    Sent from my Nexus 5 using Tapatalk
    Until proven otherwise the so called "Google Update Alliances" is dead and was just empty promises and words. One has to look no father than the pathetic and slow update process of ICS on all the manufactures and carriers. We should all be asking the question about updates and the so called Update Alliances ever chance we get.
  19. #19  

    Default Re: Capitalism and Competitive Pricing

    Quote Originally Posted by Timelessblur View Post
    True but even then it falls under the unethical category. And it can get you put on a list you rather not on.


    Sent from my Nexus 5 using Tapatalk

    So when I contact multiple companies to provide me with an estimate, which many advertise and provide for free, it falls under unethical? How is that?
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  20. #20  

    Default Re: Capitalism and Competitive Pricing

    Quote Originally Posted by SteveISU View Post
    So when I contact multiple companies to provide me with an estimate, which many advertise and provide for free, it falls under unethical? How is that?
    You are confusing getting multiple bids with bid shopping. The part I was calling unethical is bid shopping.
    Bid shopping is when you start out by calling I company b saying company a gave me price x. Can you beat it.
    It goes farther some will turn around and call company A with company B price.

    Basically it is you giving the bids you are getting to each other.

    Multiple bids is fine. Bid shopping no so much. Your first post I quoted was a classic example of bid shopping which is unethical.

    This information comes from working in the industry for a while and something made a huge point of in school for my degree in Construction Engineering

    Sent from my Nexus 5 using Tapatalk
    Until proven otherwise the so called "Google Update Alliances" is dead and was just empty promises and words. One has to look no father than the pathetic and slow update process of ICS on all the manufactures and carriers. We should all be asking the question about updates and the so called Update Alliances ever chance we get.
  21. #21  

    Default Re: Capitalism and Competitive Pricing

    Quote Originally Posted by Timelessblur View Post
    You are confusing getting multiple bids with bid shopping. The part I was calling unethical is bid shopping.
    Bid shopping is when you start out by calling I company b saying company a gave me price x. Can you beat it.
    It goes farther some will turn around and call company A with company B price.

    Basically it is you giving the bids you are getting to each other.

    Multiple bids is fine. Bid shopping no so much. Your first post I quoted was a classic example of bid shopping which is unethical.

    This information comes from working in the industry for a while and something made a huge point of in school for my degree in Construction Engineering

    Sent from my Nexus 5 using Tapatalk
    I am still trying to figure out what is unethical about that situation.

    Sent from my XT907 using Mobile Nations mobile app
  22. #22  

    Default Re: Capitalism and Competitive Pricing

    Quote Originally Posted by A895 View Post
    I am still trying to figure out what is unethical about that situation.

    Sent from my XT907 using Mobile Nations mobile app

    The practices of bid shopping in the industry is consider unethical. It is basicly you going around and telling competitors what others will do it for. It also a very fast way to **** off contractors. They gave you their price in the bid. Take it or leave it. It is fine letting them know that you are getting several bids but do not start calling company B with companies A bid then turn around and go back to A with B's bid. Hell you should never of called B wiht A's bid.
    Now if they know they are getting multiple bids they know it. Also if you do the bid shopping you can bet they will try to stick you with every little add and problem they can find on the job and demand more money and make more up in those market ups that some how have to be done after the bidding.

    It just one of those things coming from someone who used to work in the industry you do not do. It is very unethical and pisses off contractors.
    Until proven otherwise the so called "Google Update Alliances" is dead and was just empty promises and words. One has to look no father than the pathetic and slow update process of ICS on all the manufactures and carriers. We should all be asking the question about updates and the so called Update Alliances ever chance we get.

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