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Pricing to Lose vs Positioning to Win

Over the past year I’ve had the pleasure of presenting to, speaking with, and contracting various bidding organisations across the defence community and beyond. These interactions have resulted in many varied, productive (and sometimes frantic!) discussions on how to win business in today’s complex procurement landscape. And increasingly, these conversations revolve around the theme of ‘Positioning to Win’. 

Pricing to win

Bidders are facing a diverse range of challenges – and one that I come across frequently is the pressure on teams, often from executives, to price bids within a certain range. Whilst this ensures that solutions are in line with budget projections and competitor pricing, it leaves me wondering whether this pressure is in fact conducive to score-worthy bidding…

“As I hurtled through space, one thought kept crossing my mind – every part of this rocket was supplied by the lowest bidder.” John Glenn, NASA Astronaut 

Fifty years ago, NASA put man on the moon. While the world watched and marvelled at this achievement, Astronaut John Glenn, who just seven years before had become the first American to orbit the Earth, was questioning the way that NASA spaceships are procured.

Simply put, the lowest bidder always won. Not ideal when your life – and the success of your mission and the future of space exploration – relies on the equipment! I’m sure we can all empathise with his sentiment, but fast forwarding to today, has the way public authorities procure changed much since the first moon landing?

With over 150 years’ combined experience of planning, structuring and supporting complex procurement projects, my colleagues across the Commerce Decisions business maintain that the typical CAT A – C MOD procurement competition favours technical marks over price. On the other hand, many of the bid teams we talk to focus primarily on the pricing.

How can these conflicting buyer and bidder strategies co-exist? The fact is often they don’t! Bidding with a heavy-handed focus on price is no longer a proven route to success and can often cause discord between bidder and buyer. Statistics from the buy-side of the Commerce Decisions business reveal that most MOD competitions are won by bids that are not the cheapest. This would indicate that Pricing to Win is most certainly not the best strategy to ensure success every time.

This leads on to the next question; as a bidder, what can you do to ensure that you’re considering all your wider options to increase your chances of success? The answer is clear…

Position to Win

Our experience of working closely with MOD procurement teams for over 15 years has taught us that the MOD generally does not want to receive bids that are scrambling for the lowest possible price. Position to Win was developed on the foundation of this feedback. Our most experienced consultants collectively developed the Position to Win service line to address the issues faced by public procurers – by helping bidders to increase the quality of their bids.

In a nutshell, by Positioning to Win bidders can achieve the following outcomes:

  1. Swiftly identify solution approaches that can help you win
  2. Focus the bid team on how to win, and inform stakeholders of the win strategy
  3. Enable bid teams to identify and manage both internal and external risks early

Commerce Decisions supports bidders in understanding what the buyer is looking to achieve, and the impact of the selected MEAT (Most Economically Advantageous Tender) methodology being used to score the bid. Once understood, we use this to analyse the criteria one by one. By applying the weightings, we can better understand the overall best position required for bidders to score most highly. By using both competitive intelligence and our business winning experience during this process, we can also dissect and analyse where your closest competitors may score. This leads to more comprehensive risk identification, for example; joint ventures or alliances from every angle, addressing what impact it would have if Bidder X and Bidder Y joined forces with Bidder Z.

Last but not least, to support the outcomes offered by Position to Win we also provide our clients with a pre-bid Executive Level briefing where the benefits of Position to Win analysis (and more besides) are presented to Finance/Sales/Operations Executives pre-bid to create greater understanding across the board.

To summarise, in 2019, pricing to win is stale. Procurers are looking for value and value does not equal lowest possible price. The correct combination of quality, solution and price are the key and proven factors to success in today’s procurement and bidding landscape.

I’m going to be at the APMP UK Annual Conference in London on 9th October, if you’re attending and you want to learn more about how we may be able to support you to prepare the highest scoring bid, let’s book a meeting.

Please feel free to contact me at: dpatel@commercedecisions.com or dpatel on Linkedin