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Setting up a One Stop Pricing Shop

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  • 1. Setting Up a One Stop Pricing Shop Patricia Brose Lohfeld Cons lting Gro p Inc Brosey, Consulting Group, Inc. Presented to 2010 APMP-NCA Boot Camp APMP- April 19, 2010
  • 2. Agenda Start with the end in mind What is the Price? Required pricing inputs and knowledge Pricing during the capture and proposal process Pricing strategy Once you have your Price to bid O Pricing products Hand off to the execution team Conclusions2 Copyright 2010 Lohfeld Consulting Group, Inc. All rights reserved.
  • 3. Start with the end in mind Pricing proposal must be: Winning Compelling Compliant Two satisfied customer sets Your government customer Your company’s management Where Proposals and Program Execution Meet: Price to win, manage to price!3 Copyright 2010 Lohfeld Consulting Group, Inc. All rights reserved.
  • 4. What is the Price? Part of your win strategy What is your target or Price to Bid, why and how did y you determine it? A differentiator for your company The answer to “So what?” should be “Wow!” Often perceived as the best offer Perception is the key Something the customer wants and values4 Copyright 2010 Lohfeld Consulting Group, Inc. All rights reserved.
  • 5. Required pricing inputs and knowledgeStart pricing p p g process early! During capture p y g p phaseInputs to pricing process Customer intimacy and insight into their buying habits, budget, influences Competitive intelligence includes their likely solutions, bidding strategy, is it a ‘must win’? Our O position i l di our differentiation, does the customer trust iti including diff ti ti d th t t t our solution Customer and our company’s risk tolerance/response RFP Technical solution Technical solution and price are balanced throughout the capture and proposal process Copyright 2010 Lohfeld Consulting Group, Inc. All rights reserved.
  • 6. Pricing during the capture and proposal process Sources S Industry I d t Release R l Release R l Receive C d t R i Conduct Sought Day Draft RFP RFP Proposals Orals Award Opportunity Pre-Proposal ProposalIdentification/ Pursuit Preparation Development Post Submittal • O Organize capture team i t t • A i proposal resources Assign l • P Prepare and validate proposal d lid t l • Write thank-you notes Assessment • Understand customer • Conduct baseline solution outline to proposal team• Identify opportunity requirements and review • Prepare and conduct kickoff • Respond to customer• Meet with customer objectives • Identify and develop early stage meeting requests for additional• Qualify opportunity • Develop preliminary proposal products • Begin writing proposal information and• Prepare gate review solution • Prepare proposal development • Develop oral presentation, if engage in discussions package • Position solution with plan needed • Rehearse and present customer • Plan kickoff meeting • Review and approve price oral presentation • Assess competition • Prepare gate review package proposal • Prepare final proposal • Develop win strategy • Conduct Pink Team revision and submit • Develop pricing • Revise text • Receive award notice strategy • Conduct Red Team • Attend debrief • Build and execute • Revise text • D Document l lessons teaming strategy • Complete detailed edit learned • Establish price to win • Gain final management approval • Assess risk (Gold Team) • Prepare gate review • Produce proposal p package g • Quality check Q y • Deliver proposal A successful capture and proposal process 6 will address pricing throughout Copyright 2010 Lohfeld Consulting Group, Inc. All rights reserved.
  • 7. Definition of terms Price to Bid Our submitted total price We hope it’s the highest bid price possible that still wins Price to Win (PTW) A detailed, results based assessment of the price your competition on a p p particular opportunity is ‘most likely’ to bid. pp y y Cost Strategy The internal response to a decision based on PTW – what internal levers (e g reduce fee invest to reduce bid) will your (e.g. fee, company use to bring down the total price of our bid to meet or beat the PTW.7 Copyright 2010 Lohfeld Consulting Group, Inc. All rights reserved.
  • 8. Pricing strategy What is pricing strategy? What you are going to do (your objective) and How you are going to do it (specific action or actions that will achieve your objective) Objective: Bid highest price p j g p possible and still win Integral part of your compelling value proposition Affects every part of your offering Not just a low price Based on competitive intelligence: know your competitors and understand their strategies. Formulate your strategy to counteract theirs Properly developed pricing strategy establishes Clear Price to Bid and solution element price targets Boundaries for trade studies8 Confidence your company will be in the competitive range Copyright 2010 Lohfeld Consulting Group, Inc. All rights reserved.
  • 9. How to determine your Price to Bid? Price to Bid is based on: Pricing strategy Customer insights Competitive analyses and PTW Our position Build your cost model Build your fee model Model the competitive range based on customer and competition and your pricing strategy titi d i i t t Set your Price to Bid or target considering competitive range, your cost and fee model and the risk your g ,y y management is willing to take9 Copyright 2010 Lohfeld Consulting Group, Inc. All rights reserved.
  • 10. Once you have your Price to Bid Cost strategy – what will you do to meet your target? Iterate until you meet your target Selling your Price to Bid and strategy to management Senior management recommendation Recommend ‘No Bid’ if you cannot get into the competitive range Gain management’s concurrence to proceed Determine and share targets for all elements in your bid including subcontracted effort Receive pricing data for all elements Check the data – does it make sense? Iterate with responsible pricing party until you reach your target10 Copyright 2010 Lohfeld Consulting Group, Inc. All rights reserved.
  • 11. Pricing products Selling the price and your benefit to the government Create a cost narrative, part of your Pricing Volume Create the final Pricing proposal in compliance with RFP Sections L and M Pricing P i i proposal must b l t be: Winning Compelling Compliant11 Copyright 2010 Lohfeld Consulting Group, Inc. All rights reserved.
  • 12. Handoff to execution team The Key is Program Execution: Price to win manage win, to price! What the execution team needs: The entire proposal All backup data Execution plan developed during the proposal Plan to improve profitability/lower costs beyond proposal12 Copyright 2010 Lohfeld Consulting Group, Inc. All rights reserved.
  • 13. Conclusions Price is always a factor All customers have a budget Everything costs something Every technical decision should consider price Customer insights and competitive intelligence are key Start this process during capture Pricing is an iterative process to keep up with an ever changing competitive environment Pricing t t P i i strategy is critical i iti l13 Copyright 2010 Lohfeld Consulting Group, Inc. All rights reserved.
  • 14. Questions?14 Copyright 2010 Lohfeld Consulting Group, Inc. All rights reserved.
  • 15. Contacts Pat Brosey, Managing Director, Technical So u o s a osey, a ag g ec o , ec ca Solutions Capture and Proposal Management PBrosey@LohfeldConsulting.com 19377 Diamond Court Leesburg, Virginia 20175 703.282.1774 Bob Lohfeld Lohfeld Consulting Group Inc Group, Inc. 940 South River Landing Rd. Edgewater, MD 21037 410.336.6264 410 336 626415 Copyright 2010 Lohfeld Consulting Group, Inc. All rights reserved.
  • 16. References Pricing to Win –The Art of Pricing Panel The Bruce Morton Sr. Manager, Capture Excellence IS&GS Business Development Lockheed Martin May 29, 2008 -Rancho Mirage, CA16 Copyright 2010 Lohfeld Consulting Group, Inc. All rights reserved.

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