Page 220 - Writing Winning Business Proposals

Writing the Fees Slot 211

fees and expenses—with our likely returns, our value received, our benefits from
using your firm’s services on this project. “What will be our likely return on our
consulting investment?” is the question you would answer, as well as the subordi-
nate questions in Figure 13.2.
As I discussed in Chapter 3, answering this question regarding measurable
results is much easier and more direct if we’ve asked you for a project that includes
implementation. In this instance, my company should start achieving measurable
results during or immediately after the project because it includes your support in
implementation. In this instance, you could argue that our returns, accumulated
over three years, plus any one-time returns, could be compared to your consult-
ing charges for achieving those benefits.
For example, if the project’s objective were to plan and implement a finished
goods inventory reduction program and you estimate $100 million in carrying
cost and one-time cost savings over three years, we might consider an investment
in your services of $5 million to $10 million. This 10:1 to 20:1 return on invest-
ment might look favorable to us as a basis for selecting you. We like working with
those who can define compelling and believable value propositions, especially if
they can guarantee them.
To formulate such a value proposition, you need to know or to get to know our
operations fairly well. The statement “Based on our past experience, we believe
that an inventory reduction of 20 to 25 percent is achievable” is not a compel-
ling argument unless you can demonstrate to me and my colleagues that this 20
to 25 percent range applies to our (unique) situation. “Round words” is the term
we use to describe your estimates and statements that cannot be substantiated.
I’m typically eager to learn about your firm’s efforts and results elsewhere, but I
need specifics to believe that this level of opportunity/savings is achievable in my
situation. Remember, in many cases, I’ve already tried to reduce inventory, and I
am not likely to be impressed by potential savings that you scribble on the back

What multiple above your rate-based price is supportable, given my firm’s
What multiple above your rate-based price is supportable, given my firm’s
return on investment from this project?
return on investment from this project?
‡ What measurable results can we expect for the first three years after
‡ What measurable results can we expect for the first three years after
implementation?
implementation?
‡ What one-time impact (cost savings, market share increase, and so on) is is likely
‡ What one-time impact (cost savings, market share increase, and so on) is is likely
to be achieved?
to be achieved?
‡ How do these returns compare with the investment we would incur from using
‡ How do these returns compare with the investment we would incur from using
your consulting services?
your consulting services?
FIGURE 13.2 P ricing stra t eg y r ela t ed t o ROI
FIGURE 13.2 Pricing strategy related to ROI