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The Complete Three-Part Pricing Guide (For Proposals)

The Complete Three-Part Pricing Guide (For Proposals)

Pricing justification explored from nearly every angle. Nail the engineering of best value every time.
Edge Creation
5 min. read

Preface: These three parts were compiled from separate LinkedIn posts created throughout the month of January, 2022. We edited the contents and made sure each insightful point was relevant to bidding in Q4 of 2022 as well.

Part One

Justification in a theological context means 'making righteous in the eyes of God' and that's the perfect opener for this article series.

As a business owner, you have tools at your disposal to appear 'worthy' or 'valued' or 'trusted with others' investments'. This can be an ever-changing notion like your brand identity. But it can also come from a proposal document.

Pre-contract, proposals are reasons why your pricing is the why it is.

This is why I never really understood (fully) why technical submissions are sometimes required to be separate from fee/cost/pricing submissions. In these scenarios, deep down, evaluators must be questioning the point. Vendors too are unable to launch into a project without first understanding if their fee will be observed. Separating cost from its justification is a recipe for confusion, delayed responses, disconnection, and a more difficult sell once price does come up.

On the other side of the spectrum: Most people in sales (especially cold callers with long lead lists working on commission) want the price to be immediate, but this seems wrong too. It might be perfect for sales under $10K, or even $25K, but once you start venturing in the territory of larger amounts, the value gets thin.

I'm here to explore how to un-thin value... [...] (extra ellipses added for effect). Let me rephrase that. I'm writing to put value back into the conversation and have it strategically wrapped around your pricing section. Yes!

The section order that best justifies value is outlined as such:

  1. Cover Art
  2. Cover Letter
  3. Organizational Overview
  4. Qualification and Experience
  5. Staff Profile
  6. Approach/Work Plan
  7. Pricing
  8. Appendix

Obviously, some variation is good depending on your industry and the purchaser's wishes for formatting.

But that's kind of the formula. And it works best when you can make each section seamlessly transition into the next.

One area where people get it wrong:

  • Defensive or very lengthy narrative(s) exploring the reasonableness of the pricing.

Why is this bad and sometimes counterproductive?

Let's say your cost-factors text has everything you think hits the mark. It's detailed, written well, projects confidence, accurate, reflects local market conditions, etc. Great... But deep narrative exploration is appealing to only a small percentage of people who base decisions on strictly logical factors. You also risk alienating the vast majority who doesn't do the same.

Other reasons why cost factors are shown, not told:

  • Pricing information is always public domain in the US government bidding/RFP world, so you're essentially making these pricing details fall under this public domain umbrella (even if unintentionally).
  • Pricing sections are often messy enough, and adding more complexity is rarely received well. We've seen messy before. It's when dollar amounts seem to disappear in the overall arrangement of the page, with tables, headers, and everything else not helping.
  • From a practical perspective, who would be writing these narratives? Usually pricing is approved from a C-Suite or VP-type position. Are they also going to write these exploratory rationales? Most likely not.

Part Two

Let's dive deeper on this one.

Each proposal page, as the reader scans the PDF or flips through the physical copy, should be like climbing a ladder of pleasant inner thoughts. The purchaser should feel a sense of comfort, like their efforts have paid off (issuing the RFP), and this should lead to calm. In this state of calm, things start to look reasonable and okay.

Soundness, moderation, goodness will ooze out of the "$" mark... Don't believe me?

In the staffing world, the stricter the standards for hiring and placement, the more reasonable the pricing appears. 

Let's look at a few others:

  • In security, when firms who typically provide uniformed and licensed security guards start diving into the engineered safety controls embedded in the infrastructure of a facility, the $32/hour bill rate suddenly doesn't seem so high.
  • In Managed Service Provider (MSP) work, those firms that dedicate more time to explaining their communication procedures and how their brand of high-touch "thereness" leads to fewer support tickets and more informed employees on the purchaser side [takes a breath...]... Those firms will beat incumbents 99.9% of the time.
  • For micro mobility companies, fully building out incentives for disadvantaged ridership with more than temporary drops in price per mile (or the per hour price) shows a robust response existed before it was required. Many times, these equity policies come clearly made for the purchaser with the largest budget, and evaluators can spot this from a mile away! Doing more than the average here will justify a higher allocation for ensuring targets are met.
  • For web developers, pricing is tied to accessibility and ease. These are both born from focus groups, language testing, dozens of meetings, etc. Mainly social elements, much to the chagrin of programmers, inflate the perceived value of these deliverables.
  • Graphic designers have powerful revenue-generating abilities that they can suggest, recommend, or pilot, especially with cities' parks departments that host youth programs/summer activities. These are usually promoted with mere text (usually 1-2 sentences) and little else to push a parent to pay the $90+ dollars for enrollment. If a graphical or design element supplemented these youth program descriptions, it would be game over... Getting this diagnosis in print as a sample of what's to come while working with your graphic design firm will easily justify your rates.

A few general qualities come to mind right away: passion, fit, cultural or demographic appropriateness, timeliness/promptness, and evidenced professionalism, among others. Notice how they're not exactly tied to pricing. Instead, they relate to a certain sense of willingness to do "the dance" and walk the walk.

We're seeking to move above reasonability, right? We don't just want a lukewarm acceptance. We want the perceived value to be greater than the numbers on the page.

Achieving this is largely engineered.

It's an experience you're creating, just as retail shop owners burn sage, shared office spaces play music in their lobbies, and so forth.

In Part Three, we'll explore social responsibility and how to tie this into a proposal to achieve maximum pricing justification.

Part Three

Coincidently, recycling in the US and bid management expertise codification (via APMP) sort of happened at the same time, during the 1980s. To get more specific, The California Integrated Waste Management Act of 1989 became law the exact year that the Association of Proposal Management Professionals was founded.

Interesting, right?

Social responsibility (SR for brevity) is often discussed as a monolith, or avoided directly with buzzwords like "greening" and eco-friendly. The latest one we see everywhere is "equity" - relating to equal outcomes.

But actually, this concept is difficult to express in one section or page within a proposal. It relates to a rich tapestry of concepts, some obviously interconnected, while others are not explicitly related.

The SR creep started within mission and philosophy statements, migrated to employment practices, and now lives everywhere in some corporate/enterprise presentations. I liken this figurative explosion to what geologists call the Great Oxidation Event that enabled multicellular organisms to flourish billions of years ago on Earth. Whether an equal amount of flourishing has been caused via SR / a concern for society or the environment is beside the point. It's expected by purchasers who issue RFPs; so much so, that some cities and counties in Oregon ask about these types of practices before understanding what you do, when you were incorporated, and what unique qualifications you possess.

Now to the pricing part:

Pricing is tied to a vendor's place in its ecosystem.

This is pretty undisputed and shouldn't raise too many brows, especially if you mentally replace the word ecosystem with industry.

Industry is polluted, gray, filled with concrete, cold, and emits white noise. At least this is the current feeling towards the word. The more you repeat the word industry and industrial practices, the more you fill space that could have been used to better support your pricing. Industry best practices are not seen as better than an ecosystem's agreed way forward (don't ask me how!).

On the other end, a smart narrative on how a vendor is partnering to provide additional value will support pricing claims.

Other considerations related to SR and pricing:

  • Think through what mere acceptance of conventional recycling policies (for instance) mean. Simply following the norm or average will not land you in a competitive position.
  • If your niche doesn't have a rich ecosystem advocating for quality, professionalism, consistent iteration, advancement above complacency, etc., then what would it take to encourage one? What adjacent communities exist? Could they be looped in?
  • Think through the power of coalitions, coalition strategy, and how your firm engages with volunteer groups. Is it one dimensional? Do you structure these engagements to show respect for their time and need to earn/provide for their families? If so, you likely have a foundation for using SR to enhance pricing justification.
  • What makes sense for your industry (such as avoiding or NOT doing X thing) may not make sense for purchaser groups, who are more like laypeople 99.9% of the time. I have personal experience with this one; evaluators judging a proposal my team wrote were uniformly puzzled by a sentence we added about cleaning signage and picking up litter before conducting a video shoot. They couldn't see the relation between one's pride for community and how clean it was shown on screen. It took another letter and multiple conversations to explore possible scenarios where we had not cleaned beforehand, etc. What we saw as plain as day, wasn't for them.

You can tackle these by spending (minimum) 10-20 minutes each month fine-tuning SR narratives in your proposals, making sure strategies and recommendations are clear/updated, and by checking in with folks within your ecosystem. Getting previously submitted bids in markets where you frequently work might also help.

There is a limit to leveraging these strategies in low-density rural areas of OK, ID, or TX, but the mainstream purchasing world accepts SR claims as pricing justification without question.

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