rfp competitive price forecasting engine
DESCRIPTION
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.TRANSCRIPT
RFP Competitive Price Forecast Engine
win more deals profitably
Robert D. Brown III
678.947.5997
www.incitedecisiontech.com
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.
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$Price
IniDal Home Price
“Best Guess” CompeDtor
Price
Readjusted Home Price
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.
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“Boy, that escalated quickly. I mean, that really got out of hand fast!”
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.
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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
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Capture cost data according to your unique template price formula
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Capture & document raDonales for compeDtors’ price components. Calibrate with 80th percenDle predicDon ranges.
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The user interface imports the pricing data and provides key results
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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.
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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%.
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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.
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You have high confidence in these elements.
Focus your adenDon on gegng beder informaDon here
Home Price Sensi:vity to Cost Elements shows priority of adenDon for adjusDng your price to a neutral price
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AdjusDng this element moves price fastest in desired direcDon
Final Price Comparison shows all final price esDmates aner price adjustments are made
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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
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