Pricing to Win
First, in pricing to win, you’ve got to gather pricing intelligence. You goal is to predict what government buyers expect to pay, and what competitors are likely to offer as their prices, for the product or service. You’re looking for the range between too low (which raises red flags with buyers) and too high (the price above which you have no chance of winning).
In gathering pricing intelligence, you’re focusing on “same” or “similar.” You want to look at same or similar products or services, agencies, buyers, end-users, etc. You also want to look at contracts that are fairly recent. The process is loosely analogous to an attorney gathering case law to support his legal arguments or predict for his client how a court will decide a dispute. He’s looking for similar fact patterns in cases handed down from authoritative courts within the particular jurisdiction. If he can’t find something similar, he’ll look beyond that jurisdiction to other cases. He starts close, sees what he can find and expands out from there if necessary.
In pricing contracts, start with the existing buyers and end-users. Have they bought the same or similar products or services recently? A few years ago? How about others within the agency? Within the department? In short, start close and expand as required.
Remember, as we’ve said before: unlike the commercial sector, government agencies must generally divulge what they have paid for the same product or service in the past. Remember too: buyers are more willing to talk if you meet with them before the procurement is published. After publication, your questions to buyers have to be answered in writing and sent to the other bidders.
The Internet is another source for pricing information. For example, the Defense Logistics Agency publishes on the Web price history data by National Stock Number (NSN). DLA price histories show past purchases of an NSN item and the price paid for each purchase.
Similar information can be shown at state and local purchasing sites. Information on competitors’ prices also can be obtained by accessing government e-marketplaces that are based on multiple award schedule contracts. Product and service catalog pricing is publicly available at these marketplaces, but remember that the prices shown may higher than the prices that the competitor would bid on a public procurement.