The Contract You Win on Price Is the One You Pay For

Every owner remembers the tender they won by being cheapest. It feels good for about a month.

Then the real cost turns up. The rate leaves no room for a sick day, so you cover the gap with an officer on their day off. The client asks for something small that was never in the spec, and you say yes because you are new and want to keep them. Someone's licence needs renewing and the course comes out of your margin, not theirs.

I am not against winning work. I am against winning work you cannot afford to do properly, because the people who pay for that are your staff.

Price is the easy lever, and everyone pulls it

A tender is a stack of documents and a number. The number is the part a procurement team can compare in ten seconds, so it carries more weight than it should. If you are a small firm trying to get a foot in the door, cutting the rate is the quickest thing you can do.

It is also the thing your competitors can always do again, one pound lower. You cannot win that race for long, and the winner is often the firm that has not worked out what the contract really costs them.

That is the part I would push owners on. Before you submit, know what a single hour on that site costs you, all in. Pay, employer costs, holiday, training, supervision, uniform, the time you or your ops manager spend on it. Then add the hours you will not be able to bill: the cover for the one who is off, the site visits, the emails. If the rate does not clear that with something left over, you are not bidding, you are donating.

What a thin contract does to a firm

A contract that barely breaks even does not stay quiet. It shapes how you run everything else.

You stop investing in the site, because there is nothing left to invest. Your best officer gets moved there because the client is demanding, and then your other sites get weaker. Pay stays flat, because it has to, and the good ones start looking elsewhere. The ones who stay learn that the firm is stretched, and they behave accordingly.

None of that appears on the invoice. It shows up as turnover, as late arrivals, as a client who is unhappy and cannot quite say why. By then you have also lost the argument for a rate rise, because you set the bar so low when you won it.

Walking away is a skill

I think the hardest commercial decision in this trade is saying no to work that looks like growth. It feels wrong. A new site means more hours, a bigger headline number, something to tell the team.

But revenue and profit are different things, and the firms I would back are the ones that know which contracts earn their keep. A smaller book where every site pays properly will beat a larger one where half of them quietly lose money.

Some questions I would ask before a bid goes in:

• Does the rate cover the real hourly cost, including cover for absence, with a margin you would be happy with?
• Is the specification clear enough that you will not be doing unpaid extras from week one?
• Could you staff it with people you would be proud to put on it, or would you be scraping?
• If the client came back in six months asking for a cut, would you still want the contract?

If the answer to any of those is no, the cheap price is not a bargain. It is a deferred bill.

Win on something other than the lowest number

This does not mean you cannot win against cheaper firms. It means the number cannot be your only argument. Clients who have been burned before know that a low price can mean thin cover and a revolving door of officers. If you can show them how you actually run a site, who turns up, what happens when someone does not, how they will know, you are selling something the cheapest bidder cannot copy.

I have written before about how to differentiate in a crowded market and about where marketing budget is worth spending. The thread in both is the same: be the firm a client can see is in control.

See which contracts pay

You cannot walk away from the right contracts if you do not know which ones they are. A lot of owners work it out from the year end accounts, which is far too late to change anything.

This is one reason we built reporting into TacDesk that shows margin by client from your shift data, so you can see which sites are healthy and which are drifting. It is a view of your own numbers, nothing more clever than that, and it makes the next tender conversation a lot more honest.

If you want to see how that looks with your own contracts in mind, book a demo.