When you’re hungry for business, it can be tempting to focus on just coming in with the lowest bid. But this kind of pricing strategy isn’t sustainable and can actually keep your security firm from growing. In addition, underbidding creates an atmosphere of firms racing to the bottom, which hurts the security guard service industry as a whole.
Here’s how to develop a sustainable pricing strategy for security guard service that provides value and helps your security guard company grow.
Good Security Guard Service Starts With a Smart Pricing Formula
Underbidding on projects means you’re leaving money on the table. In the long run this will reduce the profitability of your whole enterprise.
Instead of approaching your pricing formula as something that has to be as low as possible to get clients, start by establishing a goal for your profit level. Calculate your costs and overhead, then add the difference to reach that goal. If it’s a lot more than you think the market will bear, look for ways to cut costs and overhead rather than slashing your profits.
Watch Your Competition
If you participate in an invitation to bid, always request copies of the other bids, whether you win or lose. Public-sector clients will often provide them to you; private clients may turn you down, but it doesn’t hurt to ask. In any case, knowing how your competitors price the same job will give you insights to improve your subsequent pricing decisions.
Once you have the other bids in hand, determine where you fall in the pack. Going over other contracts carefully over time can help you identify bidding patterns and benchmark your own costs. Your overhead might be way out of line compared with your competitors, or you may have overassumed some non-billable expenses. You may also realize that you misunderstood the scope of the project, or that you assumed that competitive pricing would come in lower than it really did.
Value Your Own Brand
It’s not always best to be at the bottom. In a highly competitive industry like security guard service, you need to bring a value beyond price, and consistent underbidding will give you a reputation for being cheap. And if you’re cutting into your own profit, you won’t be able to grow your business and sustain services to your clients. A race to the bottom hurts the industry as a whole as every organization cuts its profits just to sign another client.
You can still be competitive on price and provide a quality service. To do so, identify your company’s competitive advantage and market yourself on that, not on low prices. Are you the security expert for a certain industry or niche? Do you provide a level of customer service your competitors can’t match? These are the factors that bring value to your brand — not low prices.
Have you ever cut your own profits to win a client? How do you approach pricing your services? Are there special tools that you use? Please feel free to leave your comments below.
By Al Ricketts
