Guest Post: The Importance of Timely Price Proposals

by Marsha Lindquist
Responding to Government proposals takes significant time, planning and thought. There is nothing worse than getting the technical proposal finished on time and finding the price proposal has barely been reviewed, if at all. One of the chief complaints among both small and large companies is the pricing lags so far behind the technical proposal that management barely has adequate review time or, worse yet, can’t make informed decisions about the price. Here is how to change that.

1. Get early participation from pricing – ideally in the capture stage. It’s easier to develop pricing strategy during the capture phase of a proposal than after the RFP comes out. And it is easier to gain pricing enthusiasm when it happens early in the process.

The scenario that most often unfolds goes like this: Most companies decide to begin pricing strategy after the RFP is released. If they do pricing strategy at all. Oftentimes that doesn’t begin until the technical solution is completely flushed out. Then the pricing team is hurriedly tossed instructions to put the pricing together. The pricing team is not involved in the development of the pricing strategy and they do not have much interest in participating – they are not part of the team.

Ideally, when the pricing team is engaged as part of the capture and proposal teams they assume a greater level of ownership with the final pricing and, ultimately, gaining a win. Including pricing team members early in the capture stage gives them the knowledge and background about the customer and what price it takes to win. While engaging the pricing team does not guarantee a competitive price, it affords the team with members who are more invested in responding to the proposal schedule, along with gate reviews.

2. Schedule gate reviews – and stick to the schedule. Management reviews at critical decision points used to be accomplished at the beginning of a proposal to get approval to proceed and then at the end. People never looked back.

Gate reviews at critical milestones during the capture and proposal phases (and often after) are instrumental in evaluating whether the proposal is on track and whether the proposal ought to continue. These reviews are phased to allow you to make progress in order for the proposal to proceed through each “gate”. In each review you ought to obtain approval for the deliverables that were supposed to be completed, examine the budget and schedule for staying on track, validate any outstanding issues, and review project risks against plans. In looking into the future you should validate budget and schedule estimates as well as the business case, check on available resources to complete the proposal, and assure that the champion interest is still committed.

3. Avoid analysis paralysis of the technical solution. So much of what gets you to a winning price is dependent on the technical solution. But that doesn’t mean that you have to wait until the technical solution is complete to begin pricing.

Pricing can and should commence with a first cut at the technical solution knowing that you will change it, add to it, or subtract from it as the technical reviews unfold. That sometimes is even before the kickoff as the proposal team begins to give shape to the requirements. Once the work breakdown structure has been defined and the schedule laid out, take that framework and begin giving shape to the estimating process and ultimately the pricing process. While you are working out the cost issues, you can also determine the price factors, judgment and added values you bring to the solution. All of these components form the winning price. With several iterations of the price and technical solutions you can develop a good sense of how the price is shaping up.

The tendency is to continue to wait to estimate the work until the technical solution is complete and then price. That formula has great potential to make the bid a losing bid. Technical tendency is to analyze and analyze endlessly until the technical solution is just the way you want it. Then it is late in the bid process, giving you little time to reshape the technical solution knowing what the estimates are (high or low) and therefore the pricing.

4. Give early proposal input to the pricing team – and require iterations for regular updates. When you present the pricing team with information early in the bid process, or even before the RFP is out, you give the pricing team time to assimilate the estimating and technical input along with the pricing strategy into a meaningful early look at the pricing and your business case. They can also integrate early pricing strategy and provide the team with information that will make a difference. This gives your team adequate time to react to that information!

With an early look at the business case and pricing, your team can see what price the technical solution is generating. You know to make time for pink, red and gold team pricing reviews. We suggest that you leave time for several iterations of the pricing updates throughout the bid process into mini reviews of portions of the pricing including separate reviews for pricing and text. Develop the price in small repetitive assessments allows your team time to digest the portions of the pricing as they unfold along with the technical solution.

5. Hire a strong price proposal lead who understands process and adherence to company price reviews. Having a solid price volume lead is essential. That person ought to be process-oriented and want to present business case scenarios to management as well as pricing reviews at several meaningful intervals. Your company price review process will dictate the required reviews to satisfy your team and management gate reviews.

Engaging a price proposal lead who knows and appreciates the value of early participation and input to the pricing team, meaningful gate reviews, and facilitates getting the technical solution early and at several intervals can go a long way to making the price a winning price. That person will engage with the proposal management team to develop the pricing strategy and will orchestrate the necessary steps to get information into the team hands and company management early and often.

Accomplishing the pricing and the price volume can be a joyous process. Ideally, the price volume can be accomplished in step with the technical proposal. It is not an afterthought. It is an integral part of the proposal which, oftentimes, makes or breaks the win. Treat it and the process of getting to the right price as a vital and important part of the proposal process. You will like the results.

Marsha Lindquist, President of Granite Leadership Strategies, Inc., has over 30 years experience as a business expert in Government contractingShe has enhanced her clients’ cost competitiveness, improved their contractual positioning, and solidified overall strategies with companies including BP Amoco, DynCorp, and Northrop Grumman. Marsha adds value by telling you what you need to hearThis post originally appeared on and has been used here with permission.