How To Price Your Bid

How To Price Your Bid
How To Price Your Bid

Post Written By Maurice Harary, Forbes Councils Member

For all the complex requirements in a typical request for proposal (RFP) response, the question of how to price your bid can keep a bid manager up at night. If the price you are bidding is too low, problems with implementation and sustainability may arise. If the price is too high, a bid reviewer may be forced to overlook your firm’s qualifications and reject what would otherwise be a successful proposal. Luckily, one needn’t be Bob Barker to ensure your offer’s price is right. Instead, follow these tips.

Research The Competition

Identify a few rivals in your industry that are comparable to your own organization in order to contextualize your bid within the broader context of your competition. Businesses are not usually eager to share their pricing details, but the information is there if you know where to look.

Once you’ve found a relevant competitor, try searching news articles for contract award announcements. Alternatively, search periodicals (Google News is free and comprehensive) or the bid offerer’s website itself for information on contracts they’ve closed in the past. You may need to extrapolate or combine components from multiple past contracts, but the information is often more available than you might think. In fact, state, local and federal government RFPs usually must adhere to fairly stringent transparency requirements, which you can use to your bid’s advantage.

Break The Bid Down To Its Core Components

The joy of winning a bid for your organization will be short-lived if the price does not accurately represent the costs it takes to deliver your product or service at the highest level. Ensure you are including every aspect of work required to fulfill your commitment by breaking down tasks to their most basic components and building from there. The inclination to estimate costs conservatively is understandable, but it is important to make sure you are being honest with yourself. Avoid leaning too heavily on best-case scenarios and instead let empirical data and past experiences be your guide. As long as your bid arrives at its costs transparently and with due diligence, you can rest easy knowing that your offered price was determined openly and accurately.

Ask Clarifying Questions

The majority of RFP processes include opportunities for bidders to submit questions. Whether the RFP includes a bidder conference or simply a contact person available to respond to inquiries, this is your opportunity to gain clarity for your bid. You should not simply ask what price your bid should be, but ask clarifying questions about the requesting organization that will inform your proposed cost. It is usually appropriate to ask the bid offerer about past experiences with similar work or contracts. You can also request feedback on the specific breakdowns of tasks in your proposal. This will help illuminate their priorities for you. For example, asking the RFP’s contact person whether remote or in-person conferencing is preferable can help you better tailor your cost proposal to what the evaluators value.

Provide Multiple Options

For some RFPs, it can be beneficial for your business to provide multiple pricing options for the bid reviewer to consider. Consider offering a three-tiered proposal — silver, gold and platinum, for example — that gives your RFP target added flexibility while also demonstrating the breadth of your available services. One or two additional options presented to the client gives them more to consider than a simple yes or no.

Forbes Article Link: How To Price Your Bid