Hi Michelle and Kasey,
The pros of reverse auctions for services are the same as commodities - competition, achieving market value, and transparency. Where they differ is in how you set them up.
The cons come from the challenges below:
- Initially picking the wrong service to put out to reverse auction
- Basing the award decision strictly on price (we recommend weighing price at 50% or less)
Setting up the pricing spec that doesn’t make for apples to apples bidding (i.e. flat monthly fee for cleaning vs. cost per sq. ft.)
Reverse auctions for services have great results when you take the time to identify the right contracts and set the spec up properly.
Here are a few services that work well:
1. Janitorial Service
2. Pest Control Services
I would be happy to answer any other questions and provide you with real examples from North Carolina and across the USA. You can reach me via email andrew.clarkATebridgeglobal.com or via phone (502)714-5985.
Hope that helps!
Business Strategy Manager
eBridge Business Solutions