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Best Value: Did You Really Lose On Price?

I hear it all the time. I’m sure you do as well.

“Oh, we lost that one on price.”

Let me explain why that’s not always true. And I’ll provide you a simple rule of thumb to determine when you’ve lost due to your best value price and when you could have done more to help your client justify going with your higher price.

A Common Price Misconception

A common misconception is that it’s all about price. If someone underbids you, you’ve lost the contract.

But here’s a reality check.

  • Yes, price does matter
  • But if a client can justify going with a higher price, they often will

Beware This Go-To False Assumption

A few years ago, I met with the Vice President of a large construction management (CM) firm. To his surprise, I pulled out one of their proposals and walked him through the problems with it. I made some suggestions regarding how to make their offering more compelling.

His response was something I commonly hear, “We lost that one on price.”

That’s far too often a “go to” response when you lose in a best-value situation.

You see, he was wrong. And I had the proof. Clients often have to justify their selection decisions in writing. In this instance, I had possession of all the bids and the justification documentation.

The justification document and bids told a different story. In fact, the contract was not awarded to the lowest price bid.

And the justification document outlined why the client chose the winner. Ironically, the justification closely matched my assessment of what could be improved with the firm’s offering.

The justification made total sense. Yes, the winning firm’s price was slightly lower than this CM’s. But it was not the lowest bid.

You see, the winner had two things going for it:

  • Its price was within the 5-10-20 rule of thumb for price.
  • They were able to provide a very convincing justification why the client should choose their higher price.

Before we dig into the 5-10-20 Rule, let’s go over the common selection methods you’ll see.

The Four Selection Types

In general, there are four methods clients use to award contracts.

  • Low Bid: Where they take the lowest bid, regardless of who the bid is from.
  • Lowest Priced Technically Acceptable Bid: This is where they evaluate proposals based on predetermined pass/fail criteria and then select the lowest price from the group that passed.
  • Best Value: This is the most common selection method. This is where clients will evaluate several factors, including price. In this method, price cannot be the sole factor. This is sometimes referred to as a “Brooks Act” or “trade-off” approach.
  • Negotiated or Qualifications-Based Selection: This is when a client selects solely based on non-price factors. Then they’ll negotiate a price with the highest-rated firm. If they can’t come to an agreement, they just negotiate with the next highest-rated firm.

Clearly, best-value procurements are the trickiest because price is evaluated along with other factors. It’s also the most common approach many of us see.

Luckily, there’s a simple rule of thumb to help you determine whether or not you could have done more to convince the client to go with your higher price.

The 5-10-20 Best Value Price Rule

The 5-10-20 Rule is a tool to help you determine whether you truly lost on price. In some cases, it can help inform your price decisions.

Here’s how it works.

In very price sensitive situations, you want your price to fall within 5% of the lowest accepted proposal. As your price moves further from that 5% benchmark, it gets increasingly difficult for a client to justify selecting your firm.

In moderately price sensitive situations, ones where other factors play a major role, you’ll need to land within 10% of the lowest technically acceptable price before it gets really tough for clients to justify selecting you.

In situations where price is not among the most critical factors, even when you’re the “preferred vendor,” price can still play a role. In these cases, a price 20% higher than the lowest technically acceptable offer is going to make it hard for a client to justify selecting you. And as you reach 50% higher, it might become impossible for your client to select you for the contract.

Using The 5-10-20 Best Value Price Rule

Remember, as you move further and further away from these price benchmarks, it becomes more and more difficult for clients to select you.

That doesn’t mean it’s impossible. And I’m sure there have been situations where firms won best value procurements when their price was 50% higher than the lowest technically acceptable price. I’m sure it has happened at least one. But I’m also sure it hasn’t happened one thousand times.

And even in the most price sensitive, best value, procurement, if your bid was within 5% of the lowest price, the reason you lost was your case wasn’t compelling enough.

The 5-10-20 Rule is simply a tool to help you assess how difficult your price made it to select you.

Now It’s Your Turn

What rules of thumb have you used for pricing? Share with us in the comments.

The Ultimate Guide To Writing Skimmable Proposals

The Ultimate Guide To Writing Skimmable Proposals

It can be overwhelming. When you look at some RFPs, you can’t believe how much information they ask for.

Why do they need all this information?

But it’s the “golden rule.” They have the gold, so they make the rules. And we’re just playing the game by the rules they’ve laid out.

So, you spend hours putting together a lengthy proposal. It has approaches, plans, procedures, forms, references, resumes, declarations, answers to stupid questions, project write-ups, etc.

But all your hard work creates a major dilemma for your client.

The Classic Proposal Evaluation Dilemma Created The Need For Skimmable Proposals

Now your client is faced with the classic proposal evaluation dilemma. They’ve asked you for more information than they have time to read.

So, what do they do? They’ll skim all the proposals and make a decision based on bits of information from here and there.

You may have spent hours crafting sections that build up to a huge benefit or detail a superior differentiator. But they never even read it.

And I’ll be the first one to say that it’s a clucked-up situation.

Luckily, there is time-tested hack that lets you play by their rules but also get your key messages across.

Building The Skimmable Proposal

A “skimmable” proposal has all the detail clients ask for. But it displays information in a way that makes it close to impossible for evaluators to miss your key points.

Once you understand the key building blocks of skimmable proposals, you’ll be well on your way to using them as an almost-unfair advantage.

Benefit-Based Subheadings Make Your Key Points Unavoidable

See what I did there?

I’ve never seen a proposal and complained there were too many subheadings. Your proposals probably need a lot more subheadings.

But when proposals use subheadings, it often makes me cringe. Here’s an example.

I recently looked at a proposal section that was supposed to outline the team’s unique qualifications. Here’s one of the subheadings they used.


What?!?! That subheading made me vomit in my mouth a little bit.

First off, that’s language used by insurance adjusters…not someone you would hire to design your building!

But the bigger problem is 99% of skimmers would skip that section, based on the subheading.

The whole section described their process for delivering easily maintainable facilities at a lower construction cost. That’s a great message you certainly want the client to see.

You’ve got to make it nearly impossible for potential clients to miss your key messages. Using benefit-based subheadings is a great strategy to accomplish this.

They should have used:

“Our XYZ Process Delivers Easily Maintainable Facilities At A Lower Construction Cost”

Your proposal is not a new blockbuster film. Nobody is concerned about spoilers. Give them the spoiler up front. They’ll read more if they want to.

First off, use subheadings liberally. Second, assume your clients won’t read your text. Then identify the key benefit in your subheading.

Focus Boxes Sell Your People And Experience

We spend a lot of time putting together resumes and project experience to sell our qualifications. But evaluators simply don’t have the time to read all that we wrote.

If you are lucky, each resume may get 10 seconds of someone’s attention. Within those ten seconds, you need to make it easy for someone to get a feel for who the person is and why he or she is perfect for this assignment.

In resumes, focus boxes contain a few bullet points that identify exactly why this person is perfect for the assignment. In project write-ups, they identify why the project example is extremely relevant to the client’s project.

Within other sections in your proposal, you can use focus boxes to reinforce key messages.

Less Text Means More Of Your Proposal Will Be Read

One of the many books out there on proposal writing says cutting your proposal in half would make it better.

In many cases, I agree with that.

Proposals are that one shot you have to get yourself into the opportunity. So, we want to give it our best go. As a result, we often write more than we need to…even when there are page limits.

But here’s the problem. You cannot fully control what an evaluator does or doesn’t read. If you give them a three-page cover letter with two fantastic differentiators…they may never read those fantastic differentiators.

But if you gave them a single page with two lines on it (your two differentiators), you’ve just dramatically increased the chances that they’ll be read.

I’m using an extreme example to illustrate my point. But you have to realize that every word you add decreases the likelihood that the previous word will be read.

When writing proposals, every word must earn its way into the page. If a word, a sentence, or a paragraph doesn’t earn its way into the page…delete it.

Use less, more impactful, text in your proposals. This increases the odds that your words will be read.

Attention-Grabbing Images Bring Eyes To Your Text

I wrote a whole post on the purpose of graphics and images in proposals. So, I’m not going to go into a lot of detail on this.

Here’s the short version. The sole purpose of graphics in your proposal is to get people to read your words.

Service firms don’t win contracts because they used great stock images in their proposal. They win contracts or get shortlisted based on the words and numbers in their proposals.

You can use images to draw the reader’s attention to key points or messages.

Plopping a graphic or image in just to “fill out the page” is pretty stupid. Use images to help drive key points or messages home.

If you are skimming a page and see a compelling image or graphic, you might be drawn to read the caption or the words within that graphic. Better yet, you may decide to read the body text that surrounds that graphic.

Themes Hammer Your Key Message Home

One of my mentors, Laura Ricci, outlined in “The Magic Of Winning Proposals” how to use themes to reinforce your key message.

The proper use of a theme will create an anchor in your client’s mind. You can write statements throughout your proposal that connect to this anchor. This creates a feedback loop that reinforces your most important message.

While there has been a lot written about proposal themes, the tactic is best outlined in “The Magic Of Winning Proposals.”

Psychology Grabs And Maintains Reader Attention

How do people in the media business get your attention and maintain it? They use psychology.

There’s an entire chapter in Proposal Development Secrets about using psychology to create a “slippery slope” that will maintain your reader’s attention.

It’s an advanced tactic that has a lot of nuance. But it can be very powerful when combatting skimmers.

Now It’s Your Turn

What tactics do you use to make your proposals “skimmable?” Share what you do in the comments.

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