Page 228 - Writing Winning Business Proposals

Writing the Fees Slot 219

A Bit of a Summary, and More

In the Introduction, I wrote, “Writing always involves choice, decisions among
options, and the more options you consider, the better your chance of selecting
the most appropriate one for a given situation.” Substitute “pricing” for “writing,”
and the advice is equally apt. In this chapter, I’ve discussed seven considerations
that can influence your determination of fees:

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

These pricing considerations could make the difference between your winning or
finishing second. Remember: What worked well in one situation will not neces-
sarily work well in another. Even if the questions or industry issues are identical.
Even if the perceived benefits are comparable. Determining the right price is as
strategic an activity as any other element of your proposed offering.
Given all the logical and psychological information you’ve learned about us,
your competitors for this project, and your own strategic and tactical objectives,
how should you price a particular proposal opportunity? You certainly know by
now that I can’t answer that question specifically. But I can suggest a range of
pricing options you could consider.

◉ Rate-Based Pricing. The options start with a rate-based price developed by
summing up your proposed team members’ individual fees based on their
planned billing days. Let’s equate this rate-based price to a 1.0 on the poten-
tial-pricing scale.
◉ Investment Pricing (Discounting). Because of the strategic value of this
opportunity to your firm or the desirability of this project for internal or tacti-
cal reasons, you could choose to reduce your rate-based price by discounting
your rates (e.g., 0.9 or 0.8 times your rate base) or by investing or even giving
away your services—for example, in a diagnostic (e.g., 0.9 to 0 times the rate
base).
◉ Return-on-Investment Pricing (Contingency or Success Fee). Or you could
choose to change your price (most likely by increasing it) by adopting a return-