Of Deals and Dealers

J0403444_2There’s no free lunch. We encourage better business relationships when we pay for what we get (because we only get what we pay for). When we pay for what we get, we help better businesses (those that contribute most to our success) remain in business.

PREFACE: A SCENE FROM A PARALLEL UNIVERSE

An inner-city sidewalk closed in by grim tenements and parked cars. A car pulls up with the driver’s window rolled down. A figure steps out of the shadows and leans over the car. He extends his hand into the vehicle and deposits something into the breast pocket of the driver’s button-down shirt.

Devil In a friendly, familiar voice, he tells the driver, "Hey, this one’s on me. I’ll catch you next time around."

We recognize the dubious, if somewhat caricatured, nature of this business transaction. In the long-run, the prospects for both parties are grim. Is it any wonder that ‘dealers’ in AV equipment scramble to reinvent themselves as ‘integrators’?

For some dealers, I fear, this rebirth is little more than cosmetic surgery applied to deeply engrained business practices — traditional dealer-customer relationships. As with the aforementioned inner-city business transaction, it takes two to tango and today I’m focused on my past culpability…

Once upon a time, I engaged in project discussions with an AV dealer (maybe two) without knowing what I wanted, not wanting to make a commitment, perhaps even unwilling to talk budget.

Discussions began casually enough: I was merely ‘fact-finding’ and the dealer was simply ‘trying to be helpful’. Beneath the surface, however, mischief worked overtime on both sides of the fence.

I did more than mere ‘fact-finding’: I needed their help to design a system; however, I didn’t wish to pay for it. To that end I presented just enough information to keep those dealers interested; stringing them along.

And the dealers were doing much more than simply ‘trying to be helpful’: They wanted to get my business, to sell me their stuff. To earn my business, they bent over backwards to help my project along: site visits, equipment demos, even bid specifications. All this provided at no charge to me.

"Don’t worry about it, this one’s on me. I’ll catch you next time around."

PART TWO: THE HOOK J0395744

I believed I was getting quite a bargain: all this for free. By the time I realized that the bid spec I used contained proprietary elements designed to exclude all prospective bidders except the dealer who wrote it for me, it was too late to back out.

Alternate bidders had no idea how the equipment list was supposed to be assembled because the dealer who wrote the bid omitted all block diagrams but included installation within the scope of the bid. Consequently, the alternate bidders seriously inflated their prices for installation and programming to cover the potential costs associated with unknown elements.

PART THREE: POST MORTEM

In the end, I found myself in the exact scenario I set out to avoid: Wholly dependent upon a single vendor to whom I paid a somewhat inflated price for a somewhat inferior design. How did this happen?

Nothing of value is free. Someone had to pay for all those ‘free’ services I received from the vendor (vendors are, after all, in business to make a profit and we want to see good vendors succeed) and I was that someone. The cost of those services was bundled into the vendor’s bid — a bid rigged to preclude competition.

PART FOUR: WHAT I LEARNED

Nothing free is of value. In a bid scenario, there is no guarantee that vendor-A will win, so he hedges the bets by limiting his investment in real design work (figuring he’ll finish it up after winning the bid). The bid for ‘labor’, however, rarely reconciles the cost of a real design and the projects limp along with little more than a diagram on a cocktail napkin. Consequently, many extra costs arise that are not covered in the original bid spec.

In this scenario, no one was happy because everyone is stuck with an alligator project running into added costs and overtime. The documentation is skimpy and, as with aversion therapy, all parties are glad to be done with it when it eventually finishes.

PART FIVE: HOW I TURNED MY LIFE AROUND

J0438478_3 I’ve made it my policy to pay vendor/partners for every man-hour of work they provide to us. We’ve negotiated competitive man-hourly rates for design, installation and programming with a variety of local vendor/partners.

When we need a design, we pay for every man-hour of work (on-site and off). The outcome is a comprehensive design set that we can give to any qualified installer, who is paid for every man-hour of installation.

By paying for every man-hour of installation, our vendor/partners are better able to accommodate rush-jobs (construction projects that run past the scheduled completion date) with extra personnel and overtime.

Over time, we’ve found that, by engaging in better business practices, the quality and timeliness of our projects has improved while containing costs.

Clearly there is no future for a business that gives away its products and, because our success depends upon the viability of our vendor/partners we’d prefer to see them operate profitably.

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