Is tendering just a game of survival-of-the-cheapest?
Your pricing strategy needs to be in the right ball park, but it’s important to remember that competitive pricing doesn’t just mean cheapest. Your price should match your value proposition, ultimately instilling in the client a sense that they’re making an excellent investment when hiring you.
Tip #4: Competitive Pricing
- Present value for money. Your pricing should match the value your bid brings to the table. High value with a cheap price tag will raise eyebrows. Low value with a high price tag will find its way to the discard pile fairly smartly.
- Be in the right ball park. The client will have an acceptable range of prices they’ll consider. As long as you’re within this range, you can avoid the temptation to just race for the bottom, letting you get back to focusing on the value you’ll bring.
- Demonstrate a high ROI. Buyers are increasingly considering their long-term strategy when selecting a supplier, meaning that your upfront price is only part of their equation. They’re now giving a higher priority to finding outstanding returns on investment—so it’s your job to show you can deliver this.
Imagine going to the electronics store to buy the latest iPhone and the shop assistant says, “For you, we’ve got a special price of just $150.” You’d immediately wonder if the phone is faulty and ask, “What’s the catch?”
Instead, imagine the shop assistant saying something like this: “That’s horrible your last phone died just after its warranty ran out, I tell you what, how about we double the warranty period of this new phone at no extra cost?” That’s the sort of added value that can win over a client without even considering price reduction.
Tender survival challenge for the month:
Investigate the rates of your competitors so you know where your current pricing stands.
Also, invest some time to understand the budget constraints of your typical clients (or lack thereof). Are they heavily influenced by discounts? Are they particularly sensitive to price increases?
The answers to these questions will help guide your pricing strategy going forward.
This is the finale of our tendering survival series. To refresh your memory and further refine your tendering response skills keep these four blogs bookmarked for future reference:
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