Problem/Solution—Offering More than a Low Price

Problem: We can’t offer the lowest price to a potential client. All businesses know the realistic price they can offer for services. What can you do when you’ve performed a competitive analysis and discovered you cannot compete with the low prices your competitors are predicted to offer? Solution: While price is a powerful mode of persuasion, it is not the only factor that matters in a proposal. There are many other important steps you can take to produce a winning proposal even when your price isn’t the lowest. Capture Efforts Make a Difference Winning a contract begins long before the RFP is released. Start working with the customer during the capture phase of business development so that you can position your company and offer as the best option. When you collaborate with the customer early on, you build confidence in your organization and solution. These factors can persuade the customer to choose your offer, even if it is a higher price. Pay Attention to Evaluation Criteria A large part of proposal evaluation provides an overall score based on how well the proposal adheres to criteria established in the RFP. If you create a compliance matrix during proposal development and use it to address each requirement, you will receive a higher score. This shows the customer that you follow instructions and can keep their priorities at the forefront of the engagement. Customer focus often matters more than offering the lowest price. Offer the Best Value for Price As you set the final price you can offer, determine which type of buyer the customer is:

• Budget-limited buyers cannot afford the capability they want, will be disappointed, but will spend all available funds.
• Capability-satisfied buyers know their requirements and will purchase a solution that meets their needs at the lowest possible cost. They will resist up-selling.
• Best-value buyers balance price and capability according to their perceptions of value. They constitute most customers in structured markets for complex sales.

Best-value buyers are more inclined to accept higher prices because they understand the value they will get for that price. This allows you to put added focus on benefits of your offer. The customer will recognize those benefits, despite the higher price. Price will always be a powerful motivator for customers. However, it is not the only factor customers look at when evaluating proposals. When you can’t offer the lowest price, focus on the other aspects of customer focus and proposal development to improve your chances of winning.