Why would an organizational buyer want to get competitive bids?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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The main reason why an organizational buyer would want to get competitive bids is so that they would be able to get the best possible deal for their organization.  Competitive bidding is the best way to make sure that the price the organization is getting is the lowest price for goods and/or services that  will fit the organization’s needs.

When soliciting bids, the organization generally specifies exactly what it is that they need.  They invite any companies (sometimes only those that are on a list of preapproved bidders) to submit bids telling the organization how much they will charge to do the job.  Companies that want to do the work will submit the lowest possible bids that will still give  them an acceptable profit margin because doing so will give them their best chance of being selected to do the work or provide the goods.  In this way, the organization’s buyer can be sure of getting the best possible price for the goods and/or services that are needed.

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