A GAO study showed that 75% of government contracts go to lowest bidder & price premiums averages below 7%. Check out Pat Brosey’s pricing tips.

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
Conclusions
2 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 values
4 Copyright 2010 Lohfeld Consulting Group, Inc. All rights reserved.

5. Required pricing inputs and
knowledge
Start pricing p
p g process early! During capture p
y g p phase
Inputs 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 Proposal
Identification/ 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 studies
8
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 take
9 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
target
10 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
Compliant
11 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 proposal
12 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 l
13 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 6264
15 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, CA
16 Copyright 2010 Lohfeld Consulting Group, Inc. All rights reserved.