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Six Habits of Highly Successful Pricers

With a regulatory-laden federal procurement process, how do government contractors consistently win awards in a competitive marketplace? There is no such thing as luck when it comes to procurement, but there are proven strategies that successful contractors employ to continually outbid competitors. (5) 

 

Walking the contracting tightrope—edging out competition while generating profitis one of the most challenging balancing acts. First, you’ll need to assemble a reliable proposal team to submit winning RFP responses. Further, the ongoing bid process will require significant prep work, due diligence, continuous research, accurate reporting, proper forecasting, and precise estimating. (1) 

 

Below, we’ve outlined 6 winning strategies to help you prepare, draft, and execute a successful RFP response. 

 

  1. Research your potential client and prepare accordingly. 

Before the RFP is even released, you should be gathering relevant client data and reviewing past contract behavior. Then, you would do well to develop a clearly defined response process to meet requirements and deadlines. (2) 

Compliance. When it comes to solicitation requirements, it’s all in the details. Adhere to strict formatting guidelines and all requests; don’t let a small infraction disqualify your response. Remember to check, double check, and check again. 

 

Engagement. Your RFP response should be compelling enough to resonate with your evaluators. Present a clearly defined message and strategy that specifically shows the client agency that you’re the best company to do the work.  

 

Resources. Putting together RFP responses requires a dedicated and experienced proposal management team. You may need to outsource, but make sure the talent is reliable with a successful track record. (6) 

 

  1. Evaluate past awards. How did your competition win the bid? 

Good study habits can pay you back tenfold. Analyze your competition and the agency’s award patterns before you outbid yourself.  

 

Often, agencies will consistently award contractors who offer the best solutionnot lowest price. Others will choose the Lowest Price Technically Acceptable (LPTA). Keep track of agency’s procurement behaviors to protect your bidding reputation and profit margins. (2) 

  

  1. Scrutinize your direct and indirect costs.

Typically, direct costs are associated with a final cost objective (FAR 2.101). These costs include labor, subcontractor expenses, materials, recruitment, and travel. Indirect costs include overhead expenses (maintenance, supplies, software), administrative expenses, salaries, and accounting. Take a look at your indirect rates to find creative ways to trim costs and increase profitability. (6) 

On the other hand: While modifying your indirect rate structure may help win your current contract, consider the impact on future work and proposals. Eliminating your profit margin is not an effective strategy for winning any contract. (3) 

  

  1.  Understand the difference between evaluation risk and execution risk, and how they impact your overall strategy. 

There isn’t a “one size fits all” formula for pricing strategies around risk. Each contract presents an entirely new set of requirements and fine print. How do you develop a winning risk strategy? Let’s dive into “evaluation risks” and “execution risks. 

Evaluation Risks — Risks associated with your pricing strategy. These risks decrease your chances of award. 

Execution Risks — Risks associated with performance (cost, schedule, or technical). 

Striking a balance between both risks can be tricky. If your pricing strategy decreases both your chances of winning an award and good performance, then you will need to reevaluate your assessment. (4) 

 

  1.  Don't forget overhead and profit. 

The bidding process is getting increasingly competitivewhen margins tighten up, how do you develop winning pricing strategies and cost proposals while maintaining company profits? 

First, evaluate your operating expenses such as labor, bonuses, travel, facilities, administration, and technical staff recruitment. Many expenses do not exclusively support a specific contract but are needed for all contracts.  

The difference between winning and losing often comes down to a few percentage points on price. So beware of inaccurate forecasting, control your costs, and make sure your profit is reasonable.  

If you know the market, your client, and the right competitive price, you’ll be primed to win more contracts. (1) 

 

  1.   Streamline your process with a data-driven cost estimate. 

  

Successful government contractors build repeatable pricing models to keep a competitive edge in the price-to-win process. ProPricer's government contract pricing software helps industry proposal teams and government acquisition professionals prepare for negotiations and communicate cost and pricing positions. 

 

Remember, underpricing your proposal can place a financial burden on your company’s future. Automate where you can with tested and proven tools to develop accurate rates and competitive analyses to win more contracts while still clearing expenses and making a profit. 

 

When it comes to winning proposals, failure to prepare is preparing to fail. Start your next proposal’s preparation by requesting a ProPricer demo 

 

 

Sources 

 

  1. How to establish a profit-generating price for your government contract bid 
  1. The Price is Right: 5 Pricing Strategies that Win Government Contracts 
  1. Pricing for Government Contractors 
  1.     From “Pricer” to “Pricing Strategist” — 10 Strategies to Elevate the Pricing Professional 
  2.  The 11 Best Practices For Winning Government Contracts 
  3.  Win your next government RFP with these pro-tips 

  

  

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