By Marsha Lindquist on January 2, 2024
The Big Picture of Strategic Pricing for Government Contracts
Government contracts are a unique marketplace. Pricing preparation is unlike any other market. Most savvy companies prepare their prices differently than those in the commercial environment by weighing all the various components and factors that will affect the price over the life of the project – a strategically minded approach. Pricing in any market is a significant piece of the proposal puzzle that makes or breaks your bid. If a Government contractor wants to turn their bid into a winning reality, they need to employ a strategic pricing approach. What is a strategic pricing approach?
Strategic pricing is a process that starts with your organization’s overall business plan. What you incorporate into your specific opportunity pricing is first based on your overall company philosophy. Without that as a benchmark, you are just shooting from the hip. Most organizations consider the market they operate in before they just throw a price out there. Let us look at the anatomy of strategic pricing.
The Anatomy of Strategic Pricing is Comprehensive
The anatomy of strategic pricing is a complex and complete view of your decisions and deliberate actions, the data you will want to amass, and the important merits and value advantages you will need to arrive at a riveting price response. It is comprehensive. While most Government contractors think that price is something you arrive at quickly once the technical solution and other components are determined, we want you to think of strategic pricing as an all-inclusive process that involves many moving parts that are best derived over time. Winning companies put a rigorous focus on the customer, the management choices and assessments, the relevant data, developing the important value proposition you bring to your customer, and monetizing that value.
Most companies that win consistently make their strategic pricing process a top priority. Even when they are working on a best-value bid, they take the pricing seriously. They know that the price may be a deciding factor when all else is equal among competitors.
How do you keep the big picture in mind? Examine the anatomy of a winning pricing strategy figure above and see the complexity and entirety that strategic pricing takes. Your price strategy and the presentation of your business solution is the focal points of every bid decision.
Getting to a winning price for Government contracts involves many factors that go beyond the obvious cost-based approach. This is where high-volume bidding Government contractors stop after they tack on a measly profit. Forward-thinking Government contractors not only add business information about the customer as well as your competitors into the mix, but also take vital decisions, risks, and strategy into account. The most advanced businesses take it several steps further by respecting that some company investments in the project may be necessary to quantify the value they bring as well as the wisdom they gain from the experience and all this information – this all takes time.
Practice incorporating some of the components of the anatomy that you do not integrate today into your strategic pricing practices. With a strategic pricing mentality for every proposal, you price, you can improve your win rate, increase your profit margins, and make wise choices about what you pursue.
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About Marsha Lindquist
Marsha Lindquist is a professional consultant who has owned her practice since 1996. She works with companies to obtain profitable business with the Federal Government concentrating on the financial and contractual aspects of their company. Marsha has a 30+ year background in Government contracting specializing in working with scientific & high technology Government contracting firms. In her groundbreaking #1 Amazon Best-Selling book, Secrets of Strategic Pricing for Government Contractors Marsha Lindquist delivers the wisdom of strategic pricing for Federal proposals.
Marsha dedicates her business expertise to small start-up companies poised to grow through Fortune 500 companies interested in continuing their successes. Ms. Lindquist has achieved the distinguished titles of NCMA Fellow, APMP Fellows & APMP Practitioner (CPP) as well as Future of Pricing Honoree by ProPricer. Marsha holds an MBA from Frostburg State University and a BS in Business Administration from The American University. Marsha can be often seen hiking with her dog Ziva – a young Australian Shepherd with lots of energy.