6 ways to win proposals even though your price is higher

Price always matters. But price is not always the most important factor. If it was, no one would buy iPhones. With a consumer product, Apple succeeds even though their value proposition is completely intangible and unquantified. In a written proposal submitted to an organization, you’re going to need different strategies. To win with a higher price, you must convince the customer that you’re giving them something that makes the price difference worth it. 

In a competitive procurement, to avoid picking the lowest cost bid and to pick the proposal that costs more, the customer has to do one of two things:

• Decide that all the other lower-priced proposals are unacceptable.
• Decide that the higher priced proposal is actually a better value.

1) How to win by having an acceptable proposal when everyone submits unacceptable proposals

One strategy you can take is to prove that any approach that produces a lower price than yours will result in unacceptable sacrifices. Just claiming it won't be enough because the customer knows you are biased. You have to prove it. If you are certain of the approaches that your competitors will take and what the customer considers unacceptable, this can be an effective strategy. However, companies are often surprised by a customer’s willingness to accept less to get a lower price and by the creativity of their competitors. If you are not certain, then you might want to make use of this strategy but not completely depend on it. 

2) How does the customer know that you offer the best value?

The easiest way for the customer to justify selecting a proposal because it’s a better value is when they can objectively prove that it provides value greater than any difference in cost. If they can quantify the value difference and show that it’s greater than the price difference, they have a strong argument. They might still base a decision on value when they can’t quantify the difference, but it’s a lot harder to for them to justify that decision. 

A good example of how this can be done relates to maintenance costs. It might be worth it to pay more for higher quality parts if it lowers the costs of maintenance more than the higher cost of the parts. In other words, it’s worth it to pay more upfront if it quantitatively lowers your costs over the long run. Another example relates to automation. Paying more upfront for an automated solution might result in lower long-term labor costs. 

Saving money over the long term is not the only value-based strategy that’s possible. It’s just one of the easiest ways to convince a customer that a higher proposal price results in spending less. Sometimes an offering can be better because it delivers more or produces better results that have value. It might be worth it to the customer to pay more to get more. But again, to be convincing it’s best if you quantify what they are getting and show that the value it represents is worth any difference in price. 

3) Delivering a superior return on investment 

One way to look at these approaches is as investments that generate a positive return. The customer could take the lower price, but you're asking them to invest in a higher price in order to achieve a greater return. If you can quantify that return, it will be a lot more credible and more convincing to a customer who is skeptical when they see the term “investment” in a proposal.

4) Winning when you can't quantify your better value

When you can't quantify why you offer a better value, you can still offer an effective rationale.  You can demonstrate that something has a higher value, even if you can't pin a number on it. You can show that something will deliver more, even if you can't say how much more. When there is a range that your better value falls into, you can show that it is at least a certain amount. You can also use comparisons or outcomes to show the better value that results from your better offering.

5) Selling Insurance

Sometimes value comes in the form of intangible and unquantifiable possibilities. Risk is like that. Most of the time you can't quantify how much you've reduced risk or what the impact is definitely going to be. Risk is about probabilities and not certainties. When people are faced with uncertain risks that could have negative impacts, they often are willing to purchase insurance. You can capitalize on this by positioning your improvements as risk reduction and positioning it in ways that are similar to how insurance is positioned. Novices sell fear. Experts sell insurance.

What is the impact of the potential problems that you have identified and how have you mitigated the risks of them occurring in ways that others may not have? The extra effort you put into mitigating potential problems is the cost. The mitigation is the insurance. Mitigation is not certainty, and neither is insurance, but it does deliver peace of mind. Putting a small amount of extra effort into preventing problems or reducing their impact can pay off in a huge way, just like an insurance policy. You can say in your proposals that you put extra effort into preventing problems because the impact of those problems occurring is far larger than the cost of the effort. To a customer evaluating value this is a clear value statement, even if it is not quantified. The more detail you put into statements like this, the more credible they are. The more credible they are, the more apparent value in what you offer.

6) Everything is a trade-off

Every decision you make involving your offering involves a trade-off between value and price, or risk and reward. Every decision your competitors make also involve trade-offs. The more you explain the trade-offs, why you made them the way you did, and the impact of making them differently, the better the chances of the customer seeing the wisdom in deciding your proposal is their best alternative. Sometimes the real value you bring is your completely intangible and thoroughly unquantifiable judgment. Instead of making a claim that you have superior judgment that is impossible to prove, explain the rationale of your trade-off decisions. This proves the strength of your judgment without even using the word.

7) Winning with a low-price proposal against better value competitors

It’s much easier to win by having the lowest price. But it’s much more profitable to win with a price that’s not the lowest possible. The problem is you can never tell if someone else is going to undercut your price. If you are going to compete on price and remain profitable, you have to be really good at it. And even if you are, you might want to hedge your bet and deliver a value proposition that proves your offering is the best trade-off between price and other factors.

While being able to explain and prove your value proposition is vital when you expect competitors to undercut your price, it is also a good idea to do so when you’re going in with what you think is the lowest price possible. Flip the script. Steal your competitor's claims of being the best value by providing better proof. A low price has a value all of its own, and under budget pressure, customers may not give as much weight to value considerations. You can prove that your low price trade-off decisions are not only acceptable, but deliver the right balance between quality and price.

Expect your competitors to be doing this when you go into a proposal relying on best value strategies. May the proposal with the best proof points win!

😎 Winning consistently

Training your organization to think in terms of value and being able to prove it is part of how you achieve a win rate that continuously increases over time. When people sit down to write your proposals, if they are just thinking about this for the first time, you won't get the best results. But if, as an organization, you commonly discuss value and how to flip the script on it, you'll not only achieve better proposals with higher win probabilities, you'll also achieve better project outcomes. You will be improving your organization's collective judgment and making it part of your culture. The result will not only be better price realism, value determination, trade-off decisions, and project plans, it will be better decisions every day. How many decisions do you make in a day?