Page 219 - Writing Winning Business Proposals

210 Writing Winning Business Proposals

Pricing Considerations After In-Depth Analysis

Now let’s assume that, based on our initial contact, you’ve decided to continue dis-
cussions with us and to prepare a proposal. This situation suggests that the potential
impact on our organization is (or could be) significant and that we appear will-
ing to consider an investment in your services to achieve this impact, this desired
result, this value for me and my organization. Let’s also assume that given all the
information you’ve collected so far, you are talking to people at a high enough level
in our organization and that you believe you have a reasonable chance to win.
You now need a pricing strategy to determine the fees you will quote us. Of
course, the easiest and most direct way is to price on the basis of time and material.
Here, you would quote a total fee based on you or your team’s estimated billable
hours multiplied by your team members’ respective per-diem billing rates.
Summing up costs for the entire team and adding expenses yields the amount
you would receive for the entire project or for a specified period. Now, you know
as well as I do that this “rate-based” price is not really a pricing strategy, but
some potential clients might accept it. Typically, we dislike time and material
pricing, especially if it’s not capped, because it is far too open-ended, allowing
you to continue working without any agreed-on end point. We like end points
and deliverables. We like results—especially those that can be measured.
Accordingly, you often will need to develop a pricing strategy more sophisti-
cated and tailored than time and material, a strategy that you can defend and that
can serve as the starting point for negotiation. Elements of this strategy could
include at least seven other considerations:

◉ Our return on our consulting investment
◉ The strategic value of this opportunity to you
◉ The potential risk to you and your firm
◉ The relative capability of you and other consultants to answer our question(s)
on this project
◉ Your and your competitors’ relationship with our buying committee
◉ The desirability of this project to you for internal or tactical reasons
◉ Your pricing history with us

Some of these considerations will tend to increase your fees above a rate-based
price; others will tend to decrease them. Let’s discuss each consideration in turn.

Our Return on Our Consulting Investment

Putting yourself into our shoes is almost certain to be a compelling orientation
for us. To do this, you would compare our total costs—your proposed consulting