I just missed several tenders because I got the pricing wrong. Help!

Dear Aunty B,

I run a successful consulting company and in the last four months I tendered for five jobs and missed four.

I have not been successful in finding out why I am missing out, but I assume the quote is too expensive (which I don’t believe, as several of the companies that actually won the contracts are more expensive – I think).

And no one has made any comments about my pricing.

Anyway, any suggestions?

Leon D, Coffs Harbour

Hello Leon,

The beach is looking good. No? Well then, it is time to have a big think about the business offering, business model and then the pricing.

First of all, what are you doing wrong? Has the marketplace changed? Is there some new enterprise that is cleaning up? Are clients gravitating to a different model – maybe a one-stop shop? Are you on the nose? Have you lost contact with the networks that you started with when you left a big company to start your own consultancy?

Secondly, why can’t you get more feedback on why you missed out? Ring up and flirt, cajole, beg, charm – and find out why you are missing out on the contract. Ask a mate, who knows a mate, why you missed out. If you approach it the right way, people will tell you, because deep down everyone wants to help an entrepreneur or, as the Minister for Small Business dubbed us yesterday, enterprise workers.

Look Leon. The last thing you want to do is change your pricing if the service offering is not what people want. That will lead to a downward spiral and you WILL end up on the beach.

Once you are convinced that the market wants to buy your services, then it’s time to consider how you are marketing your services. Look at it from the customer’s point of view. What is the true value of what you are offering to the client? Can you convince them that the service delivery will be so good they should sign on the dotted line without a direct comparison of competitors’ costs? Do you need assistance preparing the tender so it is more compelling?

THEN it’s time to look at the pricing. Working out how to set the price for a tender is hard. Get your spies to ring up competitors and get a ball-park figure for a similar job. Call an industry association and try and work out how the industry is changing. Ask a mate, who knows a mate…

Remember, the last thing you want to do is drop your price when you could maintain the pricing and add more services.

Remember too that clients can also be suspicious if you drop your prices suddenly. And the marketplace is a cesspool of gossips, so you will get found out.

Good luck,

Your Aunty B

Any further advice for Leon? Send it to feedback@smartcompany.com.au.

Comments

Andrew Steel writes: Have a bid/no bid process. If you aren’t 80% sure of winning it, don’t respond! To be 80% sure you must influence the tender to be written favourably for you. This means spending lots of time in consultative sales with a few select customers rather than trying to play the percentages after the fact. Think of the time you waste trying to figure out how to respond to a tender you don’t know much about. If a tender comes out that you weren’t expecting it should go in the bin. When one comes out that you know about it should be slanted towards you, you know the KDMs, know for a fact that the customer already genuinely understands your value proposition etc. Good luck!