One of the questions that I am often asked with working with clients is how they should price desired (or “nice-to-have”) requirements when the believe their competitors are only going to price the mandatory requirements. They want to know how they can possibly be competitive in these procurements.

The key is to understand and strategically address both mandatory and desired requirements to not only ensure compliance with the required aspects of the procurement, but also showcase additional value that can set their proposal apart.

Mandatory Requirements: Your Compliance Compass

Mandatory requirements form the pricing backbone of any public sector procurement response. These are the deal-breakers, the non-negotiable criteria your pricing must meet to even be considered.  At a minimum, you need to include an accurate calculation of the costs associated with fulfilling these mandatory requirements. It is also an opportunity to showcase your understanding of the project’s scope and your capabilities to fulfill these needs. Your pricing strategy should reflect this understanding. This approach demonstrates that your company is not just capable of compliance but is also deeply committed to the project’s success.

Desired Requirements: The Value-Add Proposition

While mandatory requirements get your foot in the door, desired requirements offer an opportunity to really showcase your ability to deliver. These are the “nice-to-haves,” the aspects of a proposal that can elevate your bid from competitive to compelling. Addressing these requirements allows you to introduce a value-added pricing strategy, where the additional benefits and enhancements you propose can justify a higher price point, provided the benefits are clearly communicated and precisely aligned with the buyer’s priorities.

The trick lies in a careful cost-value analysis. Assess the direct and indirect costs of incorporating these desired enhancements against the potential value they bring to the table—not just in terms of the immediate bid but also considering the long-term strategic importance of the opportunity to your overall company objectives. This approach not only showcases your proposal’s added value but also positions your pricing as a reflection of the comprehensive benefits you offer.

Striking the Right Balance

Achieving the perfect balance in your pricing strategy involves a blend of compliance and creativity. It means leveraging desired requirements to differentiate your proposal while optimizing costs to maintain competitive pricing. This involves leveraging desired requirements as an opportunity to introduce unique solutions, technologies, or processes that not only meet but exceed the customer’s expectations. The challenge here is to incorporate these innovations in a way that adds significant value without disproportionately inflating costs. It’s about showcasing how your offering is not just a cost but an investment into efficiency, quality, or capability that will pay dividends over the life of the contract.

The Bottom Line

Crafting a winning pricing strategy in public sector procurements demands more than just understanding costs. It requires a strategic approach that balances the essential compliance with mandatory requirements against the nuanced pursuit of desired enhancements. By treating mandatory requirements as your compliance compass and desired requirements as your value-add proposition, you can develop a pricing strategy that not only meets the procurement’s baseline needs but also delivers additional value that distinguishes your proposal from the competition.

In the end, a successful bid is one that demonstrates clear value for proposed price, showcasing not only your ability to meet the project’s basic requirements but also your commitment to delivering exceptional benefits and improvements that resonate with the customer’s ultimate goals. Contact us to learn more!