This podcast explores the secrets of strategic pricing for government contractors. The guest discusses the importance of early pricing involvement and collaboration, the significance of having a pricing process, different strategies and considerations for pricing government contracts, essential tools and strategies for bidding, and the importance of competitive assessment and price to win.
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Quick takeaways
Implementing a pricing process and utilizing pricing tools can help government contractors develop a winning pricing strategy.
Using strategic secrets like tailoring pricing to meet customer needs and analyzing profit margins can enhance the value proposition and increase chances of winning contracts.
Deep dives
The Importance of Strategic Pricing for Government Contractors
Strategic pricing plays a crucial role in winning government contracts. By implementing a pricing process and considering various components, a company can develop a winning pricing strategy. This strategy involves making deliberate decisions based on data gathered about customers, competition, and oneself. By conducting competitive assessments and using pricing tools such as price-to-win analysis, companies can gain valuable insights to inform their pricing decisions. Early pricing involvement and collaboration with teammates are essential for success. Incorporating value propositions, such as offering cost savings or efficiency improvements, and translating them into visual representations in the executive summary, leave a lasting impact on evaluators. The importance of ongoing analysis and assessment of profit margins and indirect rates is highlighted, enabling companies to make unemotional decisions. By following a strategic pricing process and leveraging the toolkit of pricing secrets, government contractors can stand out from the competition and increase their chances of winning contracts.
The Strategic Pricing Process Secrets
The strategic pricing process consists of three stages: pre-RFP, RFP, and evaluation/award. In the pre-RFP stage, companies engage in activities such as gathering pricing and market data, conducting competitive assessments, and having meaningful pricing discussions with teammates. During the RFP stage, companies work on estimates, participate in color team reviews, and incorporate efficiencies and learning curves from incumbency. After submission, companies examine their pricing strategy and build an audit file to respond to questions and discussions. The adoption of a strategic pricing process ensures that important pricing activities are not overlooked, increasing the chances of success.
The Strategic Pricing Toolbox Secrets
The strategic pricing toolbox offers 27 tools that government contractors can use to enhance their pricing strategies. Some notable tools include competitive assessments, price-to-win analysis, greening your staff, incorporating efficiencies and learning curves, and intelligently impacting general and administrative costs. Competitive assessments provide valuable insights about the market and competition, while price-to-win analysis helps in setting competitive prices. Greening your staff involves bringing less-experienced but qualified individuals to gradually reduce costs. Incorporating efficiencies and learning curves from incumbency helps in estimating and pricing accurately. Impacting general and administrative costs allows companies to lower their rates and increase competitiveness. These tools, among others, assist government contractors in developing effective and competitive pricing strategies.
Powering Pricing with Strategic Secrets
To differentiate themselves in pricing, government contractors can utilize strategic secrets that enhance their value proposition. Understanding what customers value and tailoring pricing to meet those needs is crucial. A financial executive summary, incorporating visuals and action captions, helps convey the value proposition effectively. Communicating cost savings, efficiencies, and other benefits in dollarized or percentage form strengthens the proposal. Analyzing profit margins unemotionally and using the weighted guidelines approach contributes to informed pricing decisions. By leveraging these strategic secrets, government contractors can put power into their pricing and increase their chances of winning contracts.
Marsha Lindquist, president of Granite Leadership Strategies and a fellow at both APMP and NCMA, joins host Mark Amtower on this week's Amtower Off Center to discuss her book, Secrets of Strategic Pricing for Government Contractors.
