Pricing To Win
Opportunity Qualification
February 22, 2023
Sales Communication
February 22, 2023
Pricing to win is a process for achieving the price to win by developing an offer that is competitive within the customer’s value system. Essential process inputs include acquisition requirements, the customer’s budget, competitors’ likely bids, realistic costs to deliver the offered solution, and alternative solutions.
Understanding pricing to win requires common definitions and perspectives on evolving trends in business development best practice. First, key definitions:
- Price is the amount of money expected, required, or given in payment for the solution.
- Cost is the cost to the seller to supply the solution. If the seller makes a profit, then the price exceeds the cost.
- Price to compete is your interim estimate of the customer’s perception of a competitive range before final requirements are known. Use it to guide initial solution design.
- Price to win is the combination of price and capability yielding a probability of win that meets the seller’s strategic objectives based on the requirements and evaluation process. Hence, price to win is not just a number. Rather it is a number linked to a set of capabilities that generate specific measurable benefits to the buyer.
- Pricing to win is the process for achieving or arriving at the price to win and is the focus of this topic section.
Pricing to win is the next major focus in the evolution of business development best practice. In markets involving complex sales, business development practices tend to evolve in this order:
- Professional sales techniques are implemented, first tactical, then strategic.
- Professional proposal planning and management processes are implemented.
- Formal capture planning and management processes are implemented.
- A formal pricing-to-win process is implemented.
Visionary managers initiate each wave. When competitors reduce the sector leader’s competitive advantage by emulating the leader’s processes, the leader initiates the next wave of improvements.
The same general conditions that facilitate a company’s ability to use other business development best practices contribute to that company’s ability to build and sustain pricing to win and competitive assessment best practices.
Pricing To Win
1
Integrate pricing to win as a fundamental aspect of your business development lifecycle.
2
Recognize basic customer buying types to anticipate their buying behaviors.
3
Determine the customer’s addressable budget.
4
Consider the customer’s expected price.
5
Estimate and refine the price to compete based upon competitors’ bids and actual award prices on prior similar contracts.
6
Estimate and refine a price to win using an opportunity-based, bottom-up approach.
7
Compare likely bids and solutions using the winning price window (WPW)
8
Develop a strategy to achieve the price to win.
9
Incorporate customer evaluation processes into your pricing strategy.
10
Recognize the impacts of game changers, including political, economic, social, technological, legal, and environmental (PESTLE) factors or events.
11
Refine your solution based on changes in the competitive landscape.
12
Refine your strategies based on changes in your solution or competitive landscape
13
Re-assess your pricing strategies post-award and update your pricing-to-win database.
