Getting all the Business You Want at the Right PriceMost organizations would answer that they have not been getting all the business they want at the right price. It seems to be a universal response whether your organization is for profit or not. In fact, most companies would say they are winning more business but at a significantly reduced profit margin these days. Rivalry for a limited amount of business is tight. There has been pressure in the last several years to drive prices down to low levels in order to win. This trend is beginning to turn the corner. As we come out of this low price mentality, what are the questions you need to ask in order to get all the business you want at the right price?
- Are you winning all the business you want?
This first point seems like an easy question to answer. You either are or not winning all the business you want. Recently, I had a client say they were not winning all the business they wanted. When I probed about the various pricing strategy alternatives they had at their disposal, they responded that they believed they were doing all they could to win business, but what they were doing was nothing different than what they have been doing for years – and that included not winning what they wanted. They did not believe they needed to sharpen their thoughts and their virtual pencils about new and innovative pricing strategies. This point is simple. If what you are doing is not yielding different results, then you have to change what you are doing. If you are losing on price, then you have to ask yourself if you need to pull out some new pricing strategies when you approach the next opportunity. It just makes good business sense to consider all the pricing strategies at your disposal and employ as many of them as you need to win more business. That means getting creative and being open to all the options.
- Are you making all the profit you can on your projects?
This also seems like an easy question to answer. However, if you are bidding projects with an expected profit margin that you are not achieving, maybe your proposal pricing, planning, or execution cycle needs some improvement. Usually when you see you are not making the profits you planned or expected, either you were not realistic about what you bid, you did not have enough information to make an informed bid price, or you have not planned out the project to coincide with the pricing you projected. Oftentimes, we find that creating a robust pricing strategy in the capture phase of the proposal will help you define and identify all the possible options you have to improve your bottom line. Frequently, it takes a financial strategy session once you have won the business to reframe how you will implement the project with an eye towards improving the bottom line.
- Is it challenging to fill all the open positions you have – is it fast enough?
Once you have won the business, it is imperative to staff and resource the project quickly and in concert with your project planning schedule. If it is challenging to staff the open positions, you have to ask if what you bid was realistically priced. Perhaps the demand for the positions is high. When you bid high demand positions, you do have to consider that factor into your pricing. But you do not have to do that for all of the jobs you bid. Most organizations believe they need to bid all like they were high demand positions. Nothing is farther from the truth. If the demand is low for the talent you need, then you can be more relaxed about the pricing for those positions. Once you win and it becomes challenging to fill all the open positions, consider incentives that translate into cost savings to your customer. Build in performance objectives for key personnel and ask them to participate in the sometimes demanding activity of building your resources. Then incentivize them and show how forward thinking you are over your competitors.
Gaining the business you want at the right price takes your concerted effort at all stages of business development. If you plan your pricing strategy prior to the opportunity becoming live and during your proposal development stages, you will have a greater chance of winning. That includes winning at a competitive price – a price that will allow you make an appropriate profit margin and staff the project with the right talent. When you have all of these factors lined up, you can feel at ease about bidding a great proposal price.
http://www.businessinsider.com/5-unconventional-ways-to-get-more-customers-2012-2
