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 cost estimate, D&B reports on competitors, past & current contracts, competition databases and subjective examples: internet searches, investigations, projections of competitor indirect & labor rates, interviews with current & former employees, your assessment of your company, your assessment of your competitor’s strengths & weaknesses).

While PWIN is not about developing an exact number, and should be viewed as a compulsory activity to developing a winning pricing strategy, it’s a process that gives you direction to consider variables such as rates, risk, capabilities and creative pricing techniques. When you “pick” a rate rather than constructing a target range you are playing darts – you might not get near the target nor will you consider the variables that will make your price a winning price. Wrap rates are not the only driver in costing; consider need for technically compliant labor rates, escalation/de-escalation, and fee. Your best homework and analysis will consider price along with many other variables. Be serious about the process.

To develop a PWIN process that gives the data you need, you must obtain knowledge of your customer, your company, and of your competitors. Without all three knowledge bases, you will be missing all you need to develop a winning pricing strategy. Most people only focus on the competitive analysis and skip the other two steps. So you would be dealing with partial information and likely incomplete results.

1. Knowledge of customer. Customer information “must haves” include synopses, draft and final RFP, anticipated RFP release date and contract start date, contract duration, prior buying history, authorized program funding, deductions from funding for Government program support, customer staff, & reserves, and customer independent cost estimate. Other questions might be: Are they experiencing budget pressure? What is their award history? Who are their favorites? Are they single item price-sensitive? Are they price-oriented or performance oriented? Is the customer interested in more than the requirement like a lower risk approach? Are they interested in the relative value of added value features? Are the gee-wiz-bang things you are going to add high value or low value for the customer? How much would they be willing to pay for them in a best-value procurement?

2. Knowledge of your company. Be realistic about your direct and indirect rates. What you did in history isn’t something that you must repeat. Break the habit of saying “this is the way we’ve always done it”. Do an honest self assessment: of how do others see you including your customers, other companies, and outside consultants. Know your history of wins and losses and why. Resist the temptation to over emphasize your strengths but be realistic about your weaknesses. Do a top down view by knowing your competitors’ past pricing behavior & current market conditions. Find out what is the target range. Perform a bottom up analysis so that you know what your costs are really. Challenge those cost areas that don’t reach the target. Keep in mind that a bottom up analysis usually results in higher projections than the target range. That’s because the estimators put in everything they can think of. Give the estimators guidelines so that you don’t spend a great deal of time having to cut where a clear schedule and resource definition would help. In developing bid strategies include creative or new cost centers, consider de-escalation, seek quotes through competitive bidding of lowest supplier costs, design tradeoffs, and seek corporate investments in order to show your commitment to the program. Teammate pricing can get you in trouble. Know ahead what they are likely to bid since their pricing can drive up the bid.

3. Knowledge of competitors. Most often a PWIN only focuses on a competitor analysis. This is short sighted and only gives you part of the information you need. GSA Advantage, D&B, Internet searches and FOIA requests will give you information about the competing companies and their contracts. Find out who their teammates are and how they will likely bid. Gather intelligence about what corporate investments competitors are likely to make in the project and what their probable approaches are to bidding. Find the little tricks the competitors have used in the past to get lower pricing and their bid aggressiveness. Do they intend to use a new work location to get to lower costs or infuse their workforce with productivity enhanced tools? Companies tend to do the same things over time. Consider if they are the incumbent because incumbents tend to take fewer risks and think less ‘outside the box’. Consider using search services such as GovWin (fusion of Input, FedSources, and Deltek), and Tech America. Remember competitive intelligence is 80% data collection, 15% creative digging & 5% instinct or luck.

The following are the keys points to consider in developing a winning pricing strategy:
1. PWIN is not a exact number but rather a process to derive price + capabilities+ risk
2. Costs do not set price – market does
3. Get knowledge of customer
4. Competitor’s likely price includes history & bid aggressiveness
5. Get creative!
6. Timely decision making on price strategies
7. Work your own costs early
8. Resist technical temptation to over scope
9. It’s not just about wrap rates
10. Are there any certain prices that matter more – what’s the customer’s focus button?
11. Teammates can mess up your price
12. Get externally focused – Price Matters!

7 Ways to Make a Lasting First Impression on Facebook

When consumers are thinking of buying a product or service they go to the internet to do a little research. Social media profiles are often amongst the top results in search listings for brand names. Consumers will probably see your Facebook page before they see your website. That should tell you how important it is to use your social media to create and build a trust worthy brand. In fact, social media channels are search engines too and many times consumers go directly to Facebook or other social media channels for research.

While your website is filled with information about your products or services, social media can work to build trust with consumers by allowing them to see the beyond the advertising and see what a company is about daily as the content changes.

Each one of the tactics below is simple and easy to do but when you take in the overall effect, you will see how your Facebook Page will help consumers believe they can trust you and that you are the right choice.

1. Verify your page – At one time Facebook only allowed celebrities and major brands to verify their pages so you would know it was real person or brand and not an imposter. Now, if you are a legitimate company, you can get verified too. You do need proof you are a real business by providing a business phone number, a utility bill with the business name or your articles of incorporation.

2. Personal branding – Be sure to use your branding elements when creating your page. Stay consistent with your logo, color scheme, and style.

3. About page – Here is where you can really say something about your core values as a business and let consumers know important company details. You can add links to other social media accounts, link to your website or specific products, and include all of your contact information.

4. Show some personality – Social media is not about selling your product or service. It’s about creating engagement with current or potential clients. Showing product demonstrations, behind the scenes videos or images, even pets and family can help to show that there are real people behind the brand.

5. Include brand influencers – You know those people who everyone knows? If you can, include pictures of yourself with them or tag them in relevant posts. Only if you know them. Don’t just tag random influencers, that’s just bad social media etiquette and they could end up blocking you. This will help bring a new audience to your page.

6. Share good news – Did you get a write up or mention on the news? Post it so your followers can share in the excitement with you.

7. Facebook Live – This is huge and only getting bigger. Again, your follows will be able to see you are an actual person behind the brand and will be able to interact with you live. Facebook Live videos get a higher organic reach than recorded videos.

Your Top Work ABC’s

Reflecting on your business ABC’s can be an interesting exercise and a great way to be reminded of all the different factors that come together to support an effective work environment. You may agree or disagree with these points, but enjoy the read and feel free to add your own!

A’s

Ability is an important consideration in our work, especially if we’re new to a situation, eager to impress clients, bosses or colleagues. We need to be careful about feigning competency; it’s far better to ask for help, be honest or say ‘I’ll come back to you about that’. Sometimes, if we’re lacking a little expertise, it can be mutually advantageous to form alliances with other complementary businesses and so extend the range of goods or services we’re both able to offer.

Application. Was it Martin Luther King who said that if you’re a road sweeper aim to be the very best road sweeper you can be, no matter if seconds later someone throws rubbish onto those clean surfaces. Being proud of our work and doing the best job we can, whatever that is, rewards us with daily satisfaction. Take pride in making a round of drinks, doing routine admin, as well as signing that fantastic new contract.

Appraisals are important for everyone, whether conducted officially as part of a career progression or on a smaller scale. Set aside time for personal reflection, goal setting and recognition. Give yourself credit for successes along the way – they can all too easily be forgotten or dismissed. But also take time to identify areas of weakness that may benefit from some training or attention. Determine your next tier of goals and set motivational plans in place.

B’s

Busyness can be seductive. We all want to look busy, successful and in demand, but being continually busy and rushed off your feet can appear disorganised and chaotic. Use time management strategies like lists, designated times to check online and a commitment to dedicating less time to endless meetings. Share your work load and let others help.

Breaks are a valuable way to manage stress, which in turn benefits your health, wellbeing and clearer thinking. Often, upon your return, you’ll be rewarded with new ideas or a different perspective on your situation.

Boundaries. Be clear as to why you work so hard. Yes, it’s great to be occupied with meaningful work, but remember that supporting your home, children and lifestyle were often major factors in your desire for success. Allow sufficient time to enjoy those areas; your home, family, friends, hobbies and interests. Sometimes you may need to be firm and say ‘no’, if too much is being asked or expected of you.

C’s

Credit. Give credit where it’s due, to others as well as to yourself. Unconditional praise and credit is important as in, ‘well done, great job’, without adding a demotivational, ‘remember to do it like that every time’, ‘wish you were always that good’! Don’t be excessively shy about highlighting your own achievements and let others appreciate your skills and accomplishments.

Courtesy and good manners cost nothing, yet can make such a difference to your relationships, reputation and how others perceive you. Being polite and appreciative of another person’s viewpoint matters, especially in tense or fraught situations; people won’t remember how they behaved, that they were perhaps angry, rude or offensive, but they will remember how you responded and handled their issues.

Communicate well, in every area of your life. Keep clients and customers happy by providing networking opportunities, training sessions that reference your goods or services and newsletters. All these are ways to keep your business at the forefront of their minds and be viewed as a helpful supporter of their success.

Cherish your family and friends. Stay in touch. It’s all too easy to end up exchanging information updates rather than really talking about your feelings or the things that are on your mind. Make quality time for family and friends. Mutual support comes from nurturing good relationships.

Compromise and be prepared to meet halfway. Remember, you may win a battle but lose the war! Standing firm until the other person capitulates isn’t necessarily worth the ensuing hurt or damage to the relationship. A compromise can allow everyone to come away feeling that something positive has been achieved.

It’s always valuable to invest in the various parts of your life. That way you support your overall health, happiness and quality of life.

Susan Leigh is a long established counsellor, hypnotherapist, writer and media contributor who works with clients to help with relationship conflict, stress management, assertiveness and confidence issues. She works with individual clients, couples and provides corporate workshops and support.

She’s author of 3 books, ‘Dealing with Stress, Managing its Impact’, ‘101 Days of Inspiration #tipoftheday’ and ‘Dealing with Death, Coping with the Pain’, all on Amazon & with easy to read sections, tips and ideas to help you feel more positive about your life.