Can poor pricing practice put your company at risk?

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Can poor pricing practice put your company at risk?

On August 20, 2021, Posted by , In SARACCA News Blog, With No Comments

The concept of competitive pricing has evolved considerably over the years. As more players enter the market, businesses are subjected to cost and time pressures to ensure competitiveness. The risk now lies in becoming too competitive in your pricing practice, ending on projects that offer little return and often lead to compromised installations.

How can you eliminate pricing risk and still maintain the competitive edge? The answer – don’t only focus on pricing – quality and good project management play a vital role. It seems a crazy notion, but businesses that offer service, reliability, and good value are often seen in high demand. On the other hand, companies that offer cheap pricing, but poor quality, suffer from short-term profit and long-term decline.

It’s an age-old lesson that too many of us choose to ignore. Although sacrificing quality for pricing may grant you a few short-term profits, you’ll quickly run out of steam when clients fail to come back. Favoring quality overpricing will increase your company’s reputation and increase product loyalty, which will keep your business sustainable in the long run – business

So what is the solution to the risk?

Become aware of regulations and remain steadfast in offering quality installations, even if this is at an increased price. Outbidding your rival, while providing poor installation quality is not only dangerous for your client but for your business reputation and sustainability.

SARACCA (South African Refrigeration and Air Conditioning Contractors Association) believes that the focus on quality is essential, and it is up to the client and consulting engineer to select HVAC companies based on the scope of work required, opposed to costs alone.

Are clients prepared to pay more for better quality?

Absolutely, but the client needs to be aware of the pricing shortfalls by the company bidding Low for the work. It boils down to communicating with your client and ensuring that you offer the quality of the installation as top of mind. Through SARACCA membership selection is based on quality, reputation, and value of work. It is now the right time to focus on quality, while still remaining relatively competitive. It is not worth the profit (if any) to work on projects where standards have been sidelined for cost.

Members of SARACCA are informed on a regular basis on quality issues, as well as new laws and regulations governing the industry. It is vital for all HVAC practitioners to be registered with SAQCC Gas, benefit from SARACCA membership, and attend all relative meetings.

McKinsey & Company wrote an interesting piece on the power of pricing, focusing on key strategies on pricing, and how to remain competitive without giving up quality or your reputation. In an essence, as new players enter the market, companies remain competitive.  Getting skilled at quoting while remaining competitive is a tool all HVAC practitioners need in order to build company’s reputation and remain in business.

View the Mckinsey & Company article here (, or visit for details on membership benefits and joining forms.

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