This month’s posts have made the case for treating price as more than a number buried at the back of your proposal. We’ve explained the importance of price, how to position your price and how to write an pricing section executive summary. This post looks at how to position price against your competition.
In large bids, the price quote is typically packaged separately from the technical proposal. In these cases, a bidder can be disqualified for including price in the narrative. But that doesn’t mean you can’t position your price—and you should.
Positioning is the technique of describing various features—in this case price—in such a way that your offer becomes the best option in the minds of the evaluators.
Buyers want to know a price is based on some logical process, includes all their requirements, and is competitive.
Ways to position your price
Positioning is industry and project-specific. Here are some examples from situations we’ve seen.
Using trade-offs: Make any cost and price trade-offs in your pricing decisions explicit in a table or text. For example:
- We considered using the slightly cheaper D433Z technology, but our recommended solution provides 30% greater reliability (MTBF), giving you much better system uptime and lower lifetime costs.
- The recommended approach uses open trench construction. Open trench is 20% less expensive than the trenchless technology used in your reference project, which had to accommodate greater environmental and traffic issues.
As reasonable and low risk: Savvy buyers want to know your price calculations are based on sound information and that you can deliver within it. For example:
- Our price quote is calculated based on our experience with a project last year for XYZ Corporation, used as a reference. The XYZ project, which had an 90% functional overlap and was slightly larger than yours, was completed on time and within budget.
- Over 85% of labour and management costs will be for internal resources. Our two proposed subcontractors have each teamed with us on three projects in the past year. This structure enables us to price your project realistically with low risk of cost overruns.
Against competitors: If you know one or more competitors typically cut corners to make their price more attractive, call them out (without mentioning them by name). For example:
- Because of your high availability requirements, our price includes OEM warranties providing 24-hour repair or replacement on all major components during the five-year contract life. Some competitor prices may be based on cheaper third-party warranties. These technically comply with the RFP, but are typically less reliable, risking major disruption to your operations in case of a breakdown.
Find what works for you
Use the above techniques as thought-starters and brainstorm with your team to find ways to position price.
Your goals are to help evaluators have confidence your pricing is based on sound reasoning and to pre-emptively explain away any variances with competitors’ prices.
Challenged to express the value behind your price offer?