Know Your Competitors' Price .. Before They Do

“Oh I would have won that deal only if I knew my competitor’s price”! Haven’t we all heard sales folks’ crib like this. Guess what .. its possible to know your competitors pricing even before you bid. Follow these 4 steps.

Even though commercial bid pricing is one of the most crucial steps in the bid submission process, most vendors treat the process of arriving at it, rather casually. Pricing is done in excel template, Solution docs are spread across folders/laptops, and Approvals are documented in emails. Needless to say, this leads to many operational issues.

Strategically, the organization sets itself to lose crucial pricing information which could make or break future deals.

Let’s say you are deciding whether you should go with 5.5% margin or 5.75% (on a Rs 100 Cr TCV deal). What all technical and commercial bid analysis would you ideally like to have when taking such a vital call. Let’s see:

1.What have been the recent proposals submitted to this account and their outcomes? Do we have a good track record with the client or is s/he preferring someone else? Does this customer always go for L1?

2. Will I lose if I go ahead with 5.75%? What is the probability of me winning at a given price point?

3.If I approve 5.5% will I be able to secure some other benefits down the road which can compensate for the lower margin? Are there any other benefits of going with a lower margin – marquee account, competitor replacement, etc?

4. At what price point is the competition expected to be at? What has been the closest competition for similar opportunities in the given territory? What prices have they quoted? What solution they are likely to propose?

5. Should I just approve 5.6%? What other commercial bid scenarios are possible?

6.Will the customer pay higher for a better solution? Based on the technical and commercial bid analysis, how does my L1 : T1 score compare with that of the competition?

7. At what price points have similar deals closed in recent times? Even though I have not participated, can I know, what have been the average deal prices in the industry.

8. Is this deal in our sweet spot? Does it display the “win” characteristic in terms of – customer profile, territory, account mind-share, bid process, etc?

9. When we have approved similar deals in the past, have we been able to meet the planned margins?Compare the proposed margins to similar completed projects and determine the likelihood of achieving those again.

It is likely that you do such technical and commercial bid analysis today too. But are unsure of its authenticity. You realize that it is a big factor determining the deal success but it’s either difficult to get the technical and commercial analysis (when needed) or it just doesn’t exist. In either case you do what most of us do - go by our gut/intuition.

Instead, what would be the impact of having such reliable insights to your P&L. Should be a no-brainer .. right? Can we get there .. yes! How? Just do these 4 things:

1. Develop Historical data related to past deals. It definitely lies somewhere – in someone’s diary, laptop or memory. Get it down and structure it in a consistent form. At least past 4 quarter's information should be easily available thru the team members. Also, the project margins of bids won, when they were completed. This one-time effort can help you begin data analysis from day-1 itself.

2. Provision a web form to capture competition info post every win/loss. No deal in the system should be termed as closed unless the competitive info is filled in. Let neither ecstasy (win) or despair (loss), come in the way. Both technical and commercial information should be captured in as much detail as possible. This is easy in PSU opportunities where customers are mandated to publish such info. In private sector opportunities too, it’s not altogether difficult. This method will help you enrich the historical data you developed above. Yeah that’s how you build a goldmine for analysis.

3. Capture Market info about deal results where you have not participated. Most of us get intimated about upcoming RFPs thru service bureaus or field sales teams. Why not deploy someone to also capture deal results of the key accounts for the relevant territories and applicable competitors. Dirty labour, glowing results.

4. Have a Competition cell which is able to develop probable competitor solutions. With the help of your pre-sales experts and the technical data captured thru (2) above, its possible to develop an intelligent hypothesis about your competitors’ probable technical solution and therefore their indicative pricing. Most OEMs are good at this.

All this is not easy, but it’s not difficult either. Have one of your sales operation executives devote 25-50% of his/her time. And see the competition commercial bid emerge in front of you magically .. even before you bid!

Comments and observations welcome at hello@pricebid.co.