Taboo subject: Pricing

This and coming posts offer ideas for handling taboo subjects—items most proposal teams would avoid if given the option. Last week we looked at service issues.

Price is another taboo subject for many. Nearly every proposal needs to include a price, either in the main response, or in a separate envelope. Despite the effort teams make to work up their pricing, the price itself often appears only as a number on the last page, or as entries in a vendor-supplied worksheet.

Price is important. Even if the RFP scoring is weighted in favour of the technical submission, technical scores are often closely bunched, which makes it difficult to overcome a price disadvantage of even a few percentage points.

State price upfront if allowed

Approach stating price in proposals as follows:

  • In informal proposals (those submitted outside a competition), state your price in the first or second paragraph. Believing you can bury the price until you’ve won over the prospect is unrealistic. Everyone we know flips through proposals to find the price before beginning to read. Be sure to re-state your price, along with your terms and conditions, in its own section.
  • In formal proposals (RFP responses), follow the rules. If pricing is included in the main proposal, also state it in the executive summary.

Add context

Proposal evaluators benefit from information that supports your price. The goal is to show your offer is fair and reasonable. This is critical in the case of informal proposals, since there will always be pressure from within your prospect organization to issue a competitive RFP.

Depending on your industry and offering, consider:

  • Showing how the price aligns with those of similar projects
  • Breaking down the price by major phase and/or subcontractor
  • Diagramming the process used to estimate costs and prices
  • Identifying expected cost savings and return on investment
  • Reinforcing the strategic needs and issues addressed by the purchase
  • Breaking out costs related to specified requirements (e.g.. system speed, reliability, durability, service response time, extended service hours, etc.)

In each case, use graphics to visualize key point in your pricing explanation.

Include a pricing summary

In a two-envelope RFP submission—especially where pricing must be supplied on issuer-supplied worksheets—consider including pricing summary in the pricing envelope. Before you begin, confirm that the RFP does not prohibit including additional information.

In addition to providing context as above, a pricing summary can prevent evaluator errors in scoring complex offers. Here’s an example:

In response to a distributed system RFP, Complex2Clear’s client offered various endpoint options at a range of prices. The pricing worksheets assumed a one-size-fits-all solution—which all other bidders were offering. We feared the evaluators would simply multiply our highest price by their number of endpoints. We included a pricing summary to minimize this risk. It explained how to optimize price and performance at each site type and included pie charts showing alternative endpoint combinations and the total cost for each. Our client won.

Bottom line

Don’t let price be a taboo subject, especially where the offer is complex and/or multi-year.

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