Reverse Auctions as a Way to Get Your Projects Done and Save

Many people need to get projects done, and would like to have an efficient way of approaching the selection of suppliers. You might be a small business looking for a new bookkeeper or a landscaping contractor, or a private individual needing to get your roof repaired or your pool resurfaced – or needing any number of other services.

Among the normal ways of choosing a supplier is to research the yellow pages or do a Google search. You turn up a number of possibilities and talk to several of them – at least, until someone convinces you on the first or second call that they have exactly what you need, and you sign up with them.

Some people go to Craig's List and take their chances there. Others will use ServiceMagic or a similar listing service to get the names of a few recommended contractors.

Each of these processes has its own advantages and disadvantages. The quicker the process, the less likely it is to yield reliable and beneficial results. You need to be willing to put in some effort to clearly describe your requirements and any special circumstances surrounding the project, and to indicate (e.g. by quoting your ZIP code) where the job is located. Often it is very useful to include photos or sketches to clarify what needs to be done.

There are other disadvantages to the approach of serially contacting possible suppliers. You know relatively little about the suppliers you are calling, and you may easily miss some of the best. You are exposed to the sales pitch of each potential supplier you contact, often with the request that they come out and see the job. Frequently this isn't required, as they know enough from being in the business you're inquiring about to quote without visiting you. But if they visit, there is a better understanding of what sort of financial bracket you are in, and they can shade their price accordingly and try to close the sale immediately.

If you list your project on a reverse auction site, you achieve several things:

• You maintain your privacy;

• You will normally get more people reviewing your project than if you just call around;

• You'll initiate a competition between suppliers for your work;

• Each supplier will have to respond to the specification or description you put in of your project;

• Each supplier will know what the others are bidding and what qualifications they offer, so the motivation is there to match qualifications and improve price, or to reduce price to make up for lesser qualifications on paper;

• You end up with a clear contract spelled out.

A good reverse auction site will help you find potential suppliers who will bid on the job if the description is sufficiently clear, or help you clarify the description through question-and-answer exchanges. Some websites will allow the supplier to identify him- or herself, assuming that you have the motivation not to reveal your identity. Most customers recognize that calling the potential supplier exposes them to the pressure of a direct sales pitch, and many customers are trying to avoid this.

These processes will allow you to more thoroughly evaluate the offers that you receive. If a supplier is to quote and enter into a legally binding contract, he or she must be reasonably confident that they can do the job successfully for the amount bid. So they will be careful and precise in the way they put together their bid, while at the same time recognizing that they need to be competitive. Having the bids visible to all suppliers allows a competent supplier to establish the initial benchmark of quality, price and delivery that others need to match or beat. Subsequent suppliers need to improve on that benchmark – whether in quality, price or delivery time.

The quality may be best judged by the reputation the supplier has earned on the website: What sort of ratings have they been getting? How do they compare with others? If their rating has not built up much yet, what does their own website tell you about them?

Your job as a customer is to make sure you are going into business with a competent and honest supplier – and to let others know, when the job is complete, how they performed. The supplier's job is both to perform as well as possible, and to let others know how well you kept your side of the bargain – did you pay on time? Did you stick with the description and scope of work agreed on? Were you easy to work with as far as access and timing were concerned? And so on.

Reverse auctions can help you get through your list of projects in a satisfying, low pressure and professional way. Give it a try!