From Clientcopia: (can’t find the actual thing).
Project Manager: Our costs to do this project would be around $10,000. Therefore, we bid $14,000 to meet our profit goals.
Big Boss: WHAT? Those other guys are bidding $10,000 or lower!
Project Manager: They’re high-volume agencies – we’re a custom shop. Our costs are higher.
Big Boss: I think you just don’t want to do this project. Change our bid to $5,000.
Project Manager: We’d be losing $5,000 in doing so!
Big Boss: I don’t care – we need that work!
I’ve seen that before, actually, personally. There is strategy in underselling if there’s fierce competition on your own level and if there’s a high probability of repeat business that more than makes up for your loss. See the airline and fuel stations in years past. Except that large, one-off projects like what they were presumably describing, aren’t subject to these same laws.