Pricing Justification: Part One

Justification in a theological context means 'making righteous in the eyes of God' and that's the perfect opener for this article series.

As a business owner, you have tools at your disposal to appear 'worthy' or 'valued' or 'trusted with others' investments'. This can be an ever-changing notion like your brand identity. But it can also come from a proposal document.

Pre-contract, proposals are reasons why your pricing is the why it is.

This is why I never really understood (fully) why technical submissions are sometimes required to be separate from fee/cost/pricing submissions. In these scenarios, deep down, evaluators must be questioning the point. Vendors too are unable to launch into a project without first understanding if their fee will be observed. Separating cost from its justification is a recipe for confusion, delayed responses, disconnection, and a more difficult sell once price does come up.

On the other side of the spectrum: Most people in sales (especially cold callers with long lead lists working on commission) want the price to be immediate, but this seems wrong too. It might be perfect for sales under $10K, or even $25K, but once you start venturing in the territory of larger amounts, the value gets thin.

I'm here to explore how to un-thin value... [...] (extra ellipses added for effect). Let me rephrase that. I'm writing to put value back into the conversation and have it strategically wrapped around your pricing section. Yes!

The section order that best justifies value is outlined as such:

1. Cover Art
2. Cover Letter
3. Organizational Overview
4. Qualification and Experience
5. Staff Profile
6. Approach/Work Plan
7. Pricing
8. Appendix

Obviously, some variation is good depending on your industry and the purchaser's wishes for formatting.

But that's kind of the formula. And it works best when you can make each section seamlessly transition into the next.

One area where people get it wrong:

• Defensive or very lengthy narrative(s) exploring the reasonableness of the pricing.

Why is this bad and sometimes counterproductive?

Let's say your cost-factors text has everything you think hits the mark. It's detailed, written well, projects confidence, accurate, reflects local market conditions, etc. Great... But deep narrative exploration is appealing to only a small percentage of people who base decisions on strictly logical factors. You also risk alienating the vast majority who doesn't do the same.

Other reasons why cost factors are shown, not told:

• Pricing information is always public domain in the US government bidding/RFP world, so you're essentially making these pricing details fall under this public domain umbrella (even if unintentionally).
• Pricing sections are often messy enough, and adding more complexity is rarely received well. We've seen messy before. It's when dollar amounts seem to disappear in the overall arrangement of the page, with tables, headers, and everything else not helping.
• From a practical perspective, who would be writing these narratives? Usually pricing is approved from a C-Suite or VP-type position. Are they also going to write these exploratory rationales? Most likely not.

To be continued... Catch part two at a later date.

Happy Bidding!