Price-to-Win Analysis

​

Don’t Leave Money on the Table

Every government contractor has the same nightmare: losing a contract because you were $10K too high, or winning one and realizing you left$500K on the table. Price-to-win analysis is how you find that sweet spot where you beat your competition without giving away your profit. The hard truth: Most companies either bid too high and lose winnable deals, or bid too low and win contracts that don’t make money. Winners do their homework and price strategically.

​

The Four Things You Need to Know

​

Intelligence That Actually Matters

​

Find Out What Really Happens

​

Get the Real Numbers

Stop guessing what contracts cost - here’s how to find out what actually happened:

​

Figure Out What Your Competition Will Do

The most important intelligence you can get: how will your competitors price this deal? Know Their Cost Structure:

• What do their people actually cost? (Check Glassdoor, industry reports, your former employees)
• How much overhead are they carrying? (Public companies report this, small businesses usually run leaner)
• Do they use expensive subcontractors or cheaper internal staff?
• Are they based in expensive locations or low-cost areas?

Study Their Bidding Patterns:

• Do they usually bid low and try to make money on changes? Or price high and deliver premium?
• How desperate are they? (Company struggling financially will bid dangerously low)
• Do they have relationship advantages that let them price higher?
• What contracts have they won recently and what did those tell you about their strategy?

Predict Their Strategy:

• Will they focus on price or technical excellence?
• Do they have something unique that commands a premium?
• Are they likely to take a loss to break into this customer?
• What partnerships might they form to improve their position?

​

Find Your Winning Price

​

The Three Numbers That Matter

Every price decision comes down to three questions:

​

The Reality of Winning vs Making Money

Here’s what actually happens at different price points:

If You Price At	Your Odds of Winning	What This Means	Your Strategy
10% under their estimate	85% chance	You’ll probably win but make very little money	Only if you’re desperate or this opens doors
5% under their estimate	70% chance	Good odds, decent margins	Smart aggressive pricing
Same as their estimate	50% chance	Coin flip - comes down to technical score	Best value play
5% over their estimate	30% chance	Uphill battle - better have superior solution	Premium positioning required
10% over their estimate	15% chance	Long shot unless you’re clearly the best option	Exceptional value needed

​

The Math That Matters

Expected Value = (Your Odds of Winning × Your Profit) - (Cost of Bidding) Example:

• Aggressive Pricing: 70% win odds × $2M profit =$1.4M expected value
• Premium Pricing: 50% win odds × $3M profit =$1.5M expected value
• Minus $200K in proposal costs = Premium pricing actually makes more money

​

Three Ways to Win With Pricing

​

When to Price Premium (and Get Away With It)

Charge more when you can prove you’re worth it:

• You’re the only one who can do exactly what they need
• They’re scared of the technical risk and you have the proven solution
• Your past performance on similar work is clearly superior
• The cost of failure is much higher than the cost of your premium

How to justify premium pricing:

• Show them what it costs when things go wrong (downtime, security breaches, delays)
• Prove your approach reduces their risk compared to cheaper alternatives
• Demonstrate the long-term savings from doing it right the first time
• Use your past performance to prove reliability worth paying for

Price at: 5-15% above the government estimate

​

When to Play the Value Game

Best approach when price matters but isn’t everything:

• The evaluation gives equal weight to technical merit and cost
• You have real technical advantages but aren’t the only qualified company
• Multiple strong competitors means you can’t price too aggressively
• Customer wants the best value, not necessarily the lowest price

How to win with balanced pricing:

• Price competitively but not ridiculously low
• Focus your energy on showing superior value and outcomes
• Quantify the benefits of your approach vs. competitors
• Target the sweet spot where you’re competitive but profitable

Price at: Within 5% of the government estimate

​

When to Go for the Throat

Price aggressively when you have to:

• The evaluation is heavily weighted toward cost (70%+ of the scoring)
• Requirements are straightforward with low technical risk
• You have genuine cost advantages (location, efficiency, partnerships)
• You need this contract to break into a new customer or market

How to make aggressive pricing work:

• Be absolutely sure you can deliver profitably at this price
• Have contingency plans for the problems that will definitely happen
• Focus on operational efficiency and lean project management
• Plan to make money on follow-on work or contract modifications

Price at: 5-15% below the government estimate

​

Customer Budget Intelligence

​

Understanding Budget Reality

Go beyond published estimates to understand true funding: Budget Research Sources:

• Congressional budget justifications and hearings
• Agency financial management reports
• Program budget exhibits and documentation
• Multi-year procurement and funding profiles

Key Intelligence Areas:

• Total available funding vs. published estimates
• Multi-year funding availability and timing
• Budget pressures and potential reductions
• Alternative funding sources or mechanisms

​

Funding Timing and Structure

Align pricing with customer funding realities:

​

Risk-Adjusted Pricing

​

Pricing Risk Factors

Account for risks in your pricing strategy: Technical Risk Factors:

• Unproven technology or approaches
• Integration complexity and interfaces
• Performance specification uncertainties
• Regulatory or compliance requirements

Performance Risk Factors:

• Aggressive schedule requirements
• Resource availability constraints
• Subcontractor performance dependencies
• Geographic or security challenges

Financial Risk Factors:

• Customer payment history and terms
• Working capital requirements
• Currency or inflation exposure
• Contract modification likelihood

​

Risk Mitigation Pricing

Build risk mitigation into pricing: Contingency Planning:

• Technical risk reserves for unknowns
• Schedule buffers for critical path activities
• Cost reserves for scope uncertainty
• Management reserves for unforeseen issues

Insurance and Bonding:

• Performance bond requirements and costs
• Professional liability insurance needs
• Cyber security insurance considerations
• Key person insurance for critical staff

​

Advanced PTW Techniques

​

Monte Carlo Analysis

Use statistical modeling for complex pricing scenarios: Variables to Model:

• ICE estimate ranges and probability distributions
• Competitor pricing behavior patterns
• Customer budget flexibility scenarios
• Performance risk impact ranges

Output Analysis:

• Win probability distributions across price ranges
• Expected value calculations with confidence intervals
• Risk-adjusted return scenarios
• Sensitivity analysis for key variables

​

Game Theory Applications

Model competitor behavior and strategic interactions: Competitor Response Modeling:

• How will competitors react to your pricing strategy?
• What information do competitors have about your costs?
• How do past bidding patterns predict future behavior?
• What are the implications of signaling strategies?

Strategic Positioning:

• First-mover advantages in pricing announcements
• Coalition building with teaming partners
• Market positioning for future competitions
• Long-term relationship value considerations

​

Portfolio Optimization

Consider PTW in context of overall business portfolio: Portfolio Balance Factors:

• Risk distribution across contracts and customers
• Profit margin targets and business objectives
• Capacity utilization and resource allocation
• Strategic positioning and market development

Cross-Contract Synergies:

• Shared resources and overhead allocation
• Learning curve benefits across similar contracts
• Customer relationship development value
• Market positioning and competitive intelligence

​

PTW Documentation and Approval

​

Analysis Documentation

Comprehensive PTW analysis should include: Market Intelligence Summary:

• Comparable contract analysis and benchmarks
• Competitive pricing intelligence and assumptions
• Customer budget and funding intelligence
• Risk assessment and mitigation strategies

Pricing Strategy Recommendation:

• Recommended price and supporting rationale
• Alternative pricing scenarios and trade-offs
• Win probability analysis and expected value
• Strategic positioning and messaging implications

Approval and Review Process:

• Senior management review and approval
• Finance and contracts team validation
• Risk management assessment and sign-off
• Capture team alignment and buy-in

​

Pricing Decision Factors

Document key decision criteria:

1. Strategic Importance: How critical is this win to business objectives?
2. Competitive Position: What pricing flexibility do market conditions allow?
3. Risk Tolerance: What level of margin risk is acceptable?
4. Resource Availability: How does pricing align with capacity and capabilities?
5. Customer Relationship: What pricing supports long-term relationship goals?

​

Integration with Proposal Development

​

Pricing Message Development

Align pricing strategy with proposal messaging: Value Proposition Development:

• Quantify benefits and return on investment
• Demonstrate cost savings and efficiency gains
• Highlight risk mitigation value
• Show total cost of ownership advantages

Cost Volume Messaging:

• Explain pricing methodology and approach
• Justify any premium pricing with value
• Address customer cost concerns proactively
• Provide cost transparency and breakdown

​

Competitive Pricing Intelligence

Use PTW analysis to inform competitive strategy: Ghosting Competitors:

• Highlight cost risks competitors may not address
• Emphasize value areas where competitors weak
• Position pricing advantages strategically
• Address customer concerns about competitor pricing

Proposal Strategy Integration:

• Technical approach supports pricing strategy
• Management approach demonstrates efficiency
• Past performance shows cost control capability
• Risk mitigation justifies pricing decisions

Ready to learn about building effective capture teams?