Price Matters! The Role of Strategy in Developing a Winning Government Price

In these days of slashed Government budgets, price is even more a factor now then it has been ever before. Whether the procurement specifies best value or low price technically acceptable (LPTA), doing your homework and sharpening your pencil to get the most competitive price is likely to spell the difference between a win and losing an important competitive procurement.

Many companies have great technical solutions, but winning a competitive procurement requires a winning price as well as a great technical proposal. In today’s environment of lean budgets and low cost awards, Price Matters more than ever. The winning price may or may not necessarily be the low price. But more often these days, it is the low price. We seem to get involved in the mechanics of filling out the forms and spreadsheets without much of a thought to what constitutes a winning price. It takes getting information ahead of time, doing the analysis, and looking at you in the price mirror objectively.

What makes price matter so much these days is that you can win technically but lose on price. We hear this so often these days. What makes the difference? Not hoping you guess what the price ought to be. Hope doesn’t get you a win but finding out about your customer, your company and your competition will get you closer. You’ve got to make it a priority to find out what your target price range ought to be.

What most companies still do today is build up cost, slap a reasonable (or competitive) fee on the cost and submit the price. Most of the time pricing gets accomplished at the last minute with very little thought to what it takes to win. There are three parts of Price Matters – data gathering, analysis, and real decision-making about price. This process is ongoing throughout the proposal process (pre-requirement stage, proposal stage and post-proposal but before final proposal revision) and, most importantly, the process begins earlier than you think. Developing and implementing a pricing strategy as part of the win strategy is critical to a win – it can’t be accomplished at the last minute.

Most people believe that the only way to get the pricing “right” is to perform a price to win (PWIN) that will generate a target price. Let’s set the record straight here – PWIN creates a winning range rather than an exact number that translates to the winning price. PWIN activities are intended to get you to create a range of winning targets along with thoughtful actions to assess risk and capabilities – it is not an exact science or number. It’s a myth that PWIN is an exact magical number that can be calculated and used as the winning price. You weigh the prices you develop against the company capabilities and the risks your company are willing to take. The components of winning price are determined from objective data and subjective data (objective examples: current labor data, customer budget or government-generated independent …