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RFP Competitive Price Forecasting Engine


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Developing a competitive price in response to an RFP is difficult and fraught with uncertainty about competitor pricing decisions. "Priced to Win" approaches often lead to declining margins. Our approach and tool set allow you to develop a most likely price neutral position that helps you focus more attention on providing "intangible" benefits that differentiate your offering in a way that is more valuable to your potential client.

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RFP Competitive Price Forecasting Engine

  1. 1. RFP Competitive PriceForecast Engine  win  more  deals  profitably  Robert  D.  Brown  III  678.947.5997  
  2. 2. Sales  groups  employ  a  number  of  means  to  develop  compeDDve  RFP  response  bids  •  One  approach:  compare  “best  guess”  compeDtors’  prices  to  an  iniDal  home  price.  •  Adjust  the  home  price  unDl  it  undercuts  the  compeDtors’  prices.  Incite!  Decision  Technologies,  LLC  Copyright  ©  2013  All  Rights  Reserved   2  $Price  IniDal  Home  Price  “Best  Guess”  CompeDtor  Price  Readjusted  Home  Price  
  3. 3. What  can  go  wrong  with  this  approach?  •  One  rarely  knows  the  compeDtors’  price  with  certainty.  •  “Best  guesses”  are  based  on  bias,  caveats  &  anecdotes.  •  CompeDtors’  actual  price  is  based  on  uncertain  underlying  cost  components  &  desired  margins,  leading  to  compounded  uncertainty.  •  Uncertainty  leads  to  ambiguity  about  the  right  direcDon  to  adjust  price.  •  Price  compeDDon  and  margin-­‐destroying  commodiDzaDon  escalates.  Incite!  Decision  Technologies,  LLC  Copyright  ©  2013  All  Rights  Reserved   3  “Boy,  that  escalated  quickly.  I  mean,  that  really  got  out  of  hand  fast!”  
  4. 4. With  the  Incite!  RFP  CompeDDve  Price  Forecast  Engine,  you  can  •  Compare  your  price  against  the  likely  range  of  compeDtors’  prices.  •  Focus  prioriDzed  adenDon  on  which  compeDtors’  price  components  affect  your  ability  to  win  on  price.  •  IdenDfy  the  most  effecDve  areas  to  adjust  your  costs  to  price  neutrality  to  focus  on  delivering  intangible  benefits  that  customers  value  more.  •  Avoid  leaving  value  on  the  table  and  cugng  margins  by  pricing  too  low.    4  Incite!  Decision  Technologies,  LLC  Copyright  ©  2013  All  Rights  Reserved  
  5. 5. The  Incite!  RFP  CompeDDve  Price  Forecast  Engine  follows  a  three-­‐stage  iteraDve  process    Prepare  Analysis  Calibrate  CompeDtor  Cost  AssumpDons  Supply  Your  Cost  AssumpDons  Adjust  Your  Price  to  Win  at  Probability  of  Award  Can  CompeDtor  InformaDon  be  Improved?  Can  Your  Price  be  Improved?  No  IdenDfy  Most  SensiDve  Inputs  on  Tornado  Chart  Recalibrate  Inputs  with  Improved  InformaDon  Yes  IdenDfy  Most  SensiDve  Inputs  on  Your  Price  Readjust  Inputs  to  Narrow  Price  Gap  Yes  End  No  1.  2.  3.  1.  Capture  iniDal  cost  informaDon  2.  PrioriDze  areas  of  greatest  uncertainty,  gain  intelligence,  then  recalibrate  accordingly  3.  Modify  your  costs  to  reach  price  indifference  5  Incite!  Decision  Technologies,  LLC  Copyright  ©  2013  All  Rights  Reserved  
  6. 6. Capture  cost  data  according  to  your  unique  template  price  formula  6  Incite!  Decision  Technologies,  LLC  Copyright  ©  2013  All  Rights  Reserved  
  7. 7. Capture  &  document  raDonales  for  compeDtors’  price  components.  Calibrate  with  80th  percenDle  predicDon  ranges.  7  Incite!  Decision  Technologies,  LLC  Copyright  ©  2013  All  Rights  Reserved  
  8. 8. The  user  interface  imports  the  pricing  data  and  provides  key  results  8  Incite!  Decision  Technologies,  LLC  Copyright  ©  2013  All  Rights  Reserved  
  9. 9. Home  Price  Probability  of  Win  shows  the  corresponding  likelihood  of  winning  at  a  given  price  Your  current  price  is  $2.25M.  The  probability  neutral  price  is  $1.75M,  given  current  informaDon.  In  this  example,  you  will  need  to  determine  how  to  move  your  price  $500K.  9  Incite!  Decision  Technologies,  LLC  Copyright  ©  2013  All  Rights  Reserved  
  10. 10. Current  Price  Comparison  shows  your  price  compared  to  compeDtors’  likely  prices  This  appears  to  be  a  balanced  price  posiDon,  but  the  Probability  of  Win  at  Current  Home  Price  is  only  1.74%.    10  Incite!  Decision  Technologies,  LLC  Copyright  ©  2013  All  Rights  Reserved  
  11. 11. The  probability  of  winning  is  dependent  on  the  amount  of  uncertainty  about  compeDtors’  prices.  The  tornado  chart  breaks  down  the  sources  of  uncertainty  to  guide  efforts  to  gain  beder  informaDon  about  compeDtors’  prices.  11  Incite!  Decision  Technologies,  LLC  Copyright  ©  2013  All  Rights  Reserved  You  have  high  confidence  in  these  elements.  Focus  your  adenDon  on  gegng  beder  informaDon  here  
  12. 12. Home  Price  Sensi:vity  to  Cost  Elements  shows  priority  of  adenDon  for  adjusDng  your  price  to  a  neutral  price  12  Incite!  Decision  Technologies,  LLC  Copyright  ©  2013  All  Rights  Reserved  AdjusDng  this  element  moves  price  fastest  in  desired  direcDon  
  13. 13. Final  Price  Comparison  shows  all  final  price  esDmates  aner  price  adjustments  are  made  13  Incite!  Decision  Technologies,  LLC  Copyright  ©  2013  All  Rights  Reserved  
  14. 14. Benefits  of  Using  the  Incite!  RFP  CompeDDve  Price  Forecast  Engine    •  Develop  more  informed  RFP  pricing  •  Avoid  the  risk  of  pricing  too  low  (leaving  money  on  the  table)  or  too  high  (reducing  price  compeDDveness)  •  Focus  more  adenDon  on  providing  intangible  benefits  that  differenDate  your  offering  •  Win  more  deals  at  a  higher  profit  Incite!  Decision  Technologies,  LLC  Copyright  ©  2013  All  Rights  Reserved   14