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Price-to-win

Baskar Sundaram

Price-to-win is a process for analyzing competitor and customer data to determine how other bidders are likely to position their solution and bid price with their understanding of the customer’s budget and their assessment of value.

Here are some ways to best evaluate and build a strategy:

Successful price-to-win activities share several additional key elements:

○ A knowledgeable senior management champion who understands

price-to-win and is committed to using competitive information for

decision-making.

○ Getting an early start in the opportunity stage to allow for sufficient

time for effective research and analysis.

○ An independent price-to-win function from the opportunity team,

whether in-house or obtained outside, to ensure objective assessment.

○ Consistent use of repeatable tools in a well-documented process.

○ An attitude of continuous improvement.

○ Involvement of all stakeholders, including the pricing team.

○ A clear focus on providing actionable outcomes.

Engage price-to-win as early as possible and update as new information comes to light.

Price-to-win is used to identify what kind of solution your team should offer and the price point at which you should offer it which is crucial in winning a bid. Price-to-win is needed for effective best value solution development. It is a continuous process, extending throughout the opportunity phase through post-award.

Employ information systems and analysis tools.

Important tools and techniques used to conduct price-to-win are Customer Relationship Management (CRM) system and an Internal Knowledge Base. The most useful analysis tools for price-to-win analysis are custom built using Spreadsheets. Market intelligence reporting and gathering tool is currently available from INPUT/GovWin/Deltek and E-Pipeline. The budget tracking tool widely used is Fedspending.org.

Gain as much customer intelligence as possible.

Obtaining customer intelligence is essential in the price-to-win process. This can be obtained from customer meetings or presentations, as well as industry days and opportunity teaming meetings. A knowledge base can be integrated into your CRM system to track progress and information about the customer and make that information available to the team pursuing the opportunity. Intelligence about the customer’s authorized funding is vital. Obtaining an independent cost estimate is key to knowing what a customer is willing to pay for the project.

Gain as much competitor intelligence as possible.

Competitive analysis can help establish what your competitors’ bid and actual award prices would be based on prior similar contracts. Knowledge bases typically incorporate commercially available knowledge management tools and supporting techniques obtained within ethical guidelines Price your competitors’ likely solutions using the Work Breakdown Structure (WBS) developed for your own organization in a bottom-up fashion. Adjust prices to allow for changes in the business climate, rates, technology, and other sources of information

Maintain strong opportunity activities parallel to price-to-win analysis.

To succeed at price-to-win, it is essential to know how you will stack up against your competitors. Take note of the following within your organization:

Your historical cost data.

Your historical data should be located in a maintainable, easily accessible database. Look at your historical wins and losses and examine what pricing earned you wins or cost you losses. Avoid last-minute surprises on price from your teammates.

Your competitive position.

Assess your relative situation by preparing a matrix showing your competitors’ position and yours. Develop a WBS for your solution and “flow” price-to-win down to each major WBS element. Then, perform a bottom-up approach. Finally, iterate until price-to-win is equivalent to your bottom-up price. If you can’t get there, consider a no-bid.

Your pricing differentiators.

Know what your pricing differentiators are. Consider a features/benefits chart and clearly explain your differentiators and enhance your customer’s perception of your organization throughout the price volume.

Your internal risk.

Identify the top two or three areas of greatest performance risk. Position your value proposition with the customer, develop the customer’s expectations, and evaluate the customer’s understanding of best value during the opportunity phase of the procurement.

Focus pricing on value to the customer.

When it comes to presenting price, look for the ways you offer value to customers. Maximize the value you bring at minimum cost. Make it a point to show, in graphic form, what that value means for them.

Align pricing strategy with your sales strategy.

It is crucial for the sales team to determine the type of solution the customer seeks. Determine if the customer wants Lowest Price Technically Acceptable (LPTA), or wants more features and innovation? Align your pricing strategy accordingly.

 

Getting to a price-to-win target range is an iterative process that begins early in the procurement cycle and continues throughout the life of the opportunity and beyond to lessons learned after the win. Information obtained about the customer, the competition, and one’s own organization are important ingredients in determining price-to-win. Custom spreadsheets and market intelligence gathering are important tools for assessing price-to-win. All things being equal, a winning price must offer value to the customer. It is up to offerors to learn from their customers what constitutes value to them.

 

The article briefly details key examinable syllabus area from the APMP Foundation certification.

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