Losing Bids on Price? How to Reverse the Trend

If your business is regularly losing bids because of price, we’ve got 12 Top Tips to help you reverse that trend:

1. Understand the market price for your goods or service. Before you submit your bid, make sure you have taken the estimated contract value on the tender notice into account. If your own costs are at odds with those estimates, use Clarification Questions (CQs) to challenge the basis of the forecast contract value.

Once a contract has been awarded, you may be entitled to see how the headline scoring for all bidders was allocated. Public sector buyers share a lot of detail regarding their tenders. Some buyers will offer a detailed analysis of their scoring and may be happy to hold a personal debriefing with you about your bid. Use these opportunities as part of your ‘lessons learned’, to understand how your pricing differed from the winning supplier.

2. Be clear about how the scoring matrix will be evaluated. Experiment with the matrix early on to ensure you are familiar with how it functions, and that it works properly. Unpick how your bid will be rated so that you can maximise your scoring.

3. Use Clarification Questions to interrogate the specification and gain clarity. If you wanted to deliver the contract as cheaply as possible, what would you do? Ask CQs to flesh out the scope so that all bidders have a shared understanding of what is required and are all bidding for the same thing. For example, buyer requirements around social value and environmental policy are becoming more prominent, and these in particular could need clarification to understand how they will be measured and monitored.

4. Warm up your buyer. Is your business known to the buyers, or are you an unfamiliar supplier? Mitigate this by researching the buyer and making contact with them whenever possible, perhaps at briefing events, or by sharing briefing papers. Having initiated a relationship with the buyer organisation, explore their view of you as a potential supplier.

5. Interrogate your Sales and Business Development teams. How familiar are they with the buyer organisation? Can they brief you on the buyer’s pain points, interests, worries and aspirations?

6. Stay in contact with the client. Even if you don’t win the contract, keep in touch to monitor how successful the chosen suppliers are in delivering it. Also consider making a discreet Freedom of Information request after the contest, to gain access to details about the final contract. You might be able to see the terms, the submitted bid, and even the agreed pricing. Later in the contract lifetime, you may be able to uncover details of how well the winning bidder delivered against the requirements, which will help your chances of winning when the contract comes up for renewal.

7. Negotiate with your supply chain. Are the costs underpinning your bid the best that they can be? Market test them to make sure, but also ask your own suppliers to consider cutting their prices to contribute to a lower cost quote, which could ultimately benefit you both.

8. Allocate your bidding costs differently. How are you recovering the sales and bidding costs for the bid? We recommend that you absorb them as general business development overheads rather than adding them to the cost of the contract and potentially inflating your quote compared to your competitors.

9. Seek out employee ideas on cost savings and efficiencies. Your own people might have great innovation and cost-saving measures that can reduce the cost of your bid. Give them the chance to share these ideas with you.

10. Understand the Price / Quality evaluation split. Be clear about your market positioning; are you offering a premium, mid-range or economy product or service, and does that fit with the drivers behind the tender? For example, if this tender is all about price and you are a premium supplier, then your prospects of winning may be slim and your bid effort could be better applied elsewhere.

11. Adjudicate your pricing. Have a range of subject matter experts within your organisation – not just those based in the Finance team – review your pricing before you submit the bid. Encourage them to challenge you when they identify any opportunities to reduce price.

12. Review your Pricing Strategy. Do you have one, and is it serving you well? If not, are you willing to change your pricing to achieve your immediate objectives? For example, might you offer a lower price in order to gain access to a new, potentially lucrative market?

Most importantly, stay optimistic about your prospects for the next bid; use these top tips to improve your chances of success, or consider bringing in a bid specialist to help you prepare your pricing strategy going forward.