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Blog | 12.16.20

Are You Pricing Yourself Out of Government Contracts?

After every government contract bid, you have the opportunity to participate in a debrief with agency officials, including procurement officers, to find out why a certain product, service or solution was selected – or not selected. Though there may be many different criteria used to make the final purchase decision, you’re only going to make the short list if “the price is right.”

Of course, you probably won’t have visibility into competitor pricing until after a contract is awarded or e-commerce purchase completed and public records are updated with spend disclosures. You may not even know who else is bidding on a contract until after your own proposal has been submitted. But that doesn’t mean you have to go into a bid blind. You can conduct pre-bid market research to understand how your pricing compares to those who have been awarded past contracts, including open contracts that may still be leveraged in your category. You can also contact the contracting officer managing the solicitation or daily commodity purchases via online e-commerce sites to see if he or she can share average spend ranges.

Realizing that you can only trim your margins so much, it’s possible that you won’t be competitive on every bid – at least not from a pricing perspective – and that’s okay. You should still respond to solicitations. You never know when your performance record, quality rating or specialized offering will be favored over pricing. However, you don’t want to automatically disqualify yourself simply because you’re “far too expensive” and they don’t look past your proposed price.

Remember, the public sector is more financially strained than ever and agencies are having to come up with creative ways to provide services with very little spend. They are going to try to stretch every dollar. The more that you can show that you understand their struggle and are making an effort to “be a partner,” the more likely they are to give your proposal a closer look.

So, once you have an idea of target pricing, do what you can to offer volume discounts, reduce (or eliminate) shipping charges and help agencies get more for their money.

If you already offer competitive pricing but are struggling to respond to – or win – a lot of bids given your own resource constraints, you should consider uploading your catalog to the Periscope Marketplace. It gives buyers within state and local agencies, as well as several other public sector organizations, visibility into your offerings. If they see that you have what they need, and your market price is lower than their contracted vendors, it’s very possible they’ll pick up the phone to see what you can offer – especially if their normal vendors can’t deliver what they need, when they need it.

In other words, pay attention to what others are charging and what your target customers are spending. There are plenty of resources out there to help you identify a ballpark range for each of your bids. And, if you do find out that you’ve been awarded a contract, be ready for further pricing negotiations. (You can read more about what to expect during the negotiation process in this blog post.)