The price-quality balance in Real Estate services

Commerce. Basically, the exchange of goods and services between one or multiple parties. Commerce is part of our lives, in all of its shapes, from buying groceries to contracting a company to execute works on a construction site. Of course, commerce is so much more than buying food or hiring a company to deliver services – but still, there are two easily identifiable components from the commerce world which stand out the most: price and quality.



 Price or quality – which one is more important?

Taking things a bit further to the real estate services area, we would first have to identify the players of the game. On one hand we have real estate companies, investment funds – aka The Beneficiaries, and on the other hand we have the service providers, facility and property management companies – aka The Contractors.

Now this is where things get interesting – let’s start with The Beneficiaries. It is a known fact that when a beneficiary is contracting services, the price will always dictate over quality. The Beneficiaries need to accomplish legal and contractual agreements with their stakeholders, therefore price is king. We appreciate a 70%-30% ratio of the price-quality duo is implied by default, whenever The Beneficiaries start a services contract tender. But how does this affect the services quality of The Contractors? 

We can now talk about The Contractors of services in the real estate market. Recent times have shown that contract tendering has proved to be a though and exhausting battle for most of The Contractors. Therefore, many of The Contractors are constantly bidding lower than their minimum profit margin – all of this just to land a contractual agreement. This is the point where quality ceases to exist, profit is lost and everybody loses.

We most certainly can agree that price is important. But where do you draw the line in relation to the quality aspect?



The backbone of the real estate services

The following statement may prove to be too sensitive for some of The Contractors: in certain circumstances, you may need to forget about a potential contract – just leave from The Beneficiary’s table. No one will benefit from a low cost – high expectation services contract.

We know that the above mentioned phrase can be hard to swallow, but The Contractors need to educate themselves, and not sacrifice the quality level of their services in order to bring a lower price to The Beneficiary’s table. It’s a lose-lose situation. 

Bad quality services will eventually lead to unsatisfied Beneficiaries and contractual discontinuance.

Taking into consideration all of the above, this is where the backbone of the real estate services enters the scene. The Contractors must educate themselves and in order to be able to tender quality services in the real estate market. Greediness doesn’t belong in an ideal scenario – taking the contract at any cost is not a sustainable business model.

To conclude, high quality services require correct pricing. Low cost and high quality expectation is never a viable solution, is a false economy and will also further affect the entire services market. And to answer the question in the title, quality is always the winner in this battle – satisfied Beneficiaries will most likely create long-lasting partnerships that will benefit both all implied parts.


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