1. Price to Win Process Jon Myerov, AM.APMP, CIP Copyright
2014, Jonathan S. Myerov 1
2. Price to Win Defined Copyright 2014 Jon Myerov 2 Definition:
The highest price we can offer and still win Shaped entirely by
external factors: the customer and the competition The winning
price will not always be the lowest price Using an effective PTW
process early can be the single most determinative factor in
securing new business Customers key decision makers must like us
and prefer our solution Our pricing must be in line with both
competitors and proposal evaluation scoring/weighting The best,
most successful companies use mature PTW processes
3. When to Do PTW Copyright 2014 Jon Myerov 3 PTW is iterated
throughout the capture process Develop initial PTW target before
bid/no-bid With a go decision, PTW process gets launched in earnest
driving to the Should Price and the Bottoms-Up Analysis (BUA) This
all should occur in advance of the RFP being issued SShhaarree ooff
TToottaall EEffffoorrtt Preliminary PTW (15%) PTW (65%) PTW Update
(15%) PTW Update (5%) WWhheenn CCoonndduucctteedd Before bid/no-bid
decision After setting win strategy; before setting cost targets
After RFP drop; during proposal development During BAFO development
MMaaiinn PPuurrppoossee Justifies bid/no-bid decision Drives work-
share and verified win strategy Justifies proposal go-ahead
decision
4. PTW Relies on Three Different Analyses Copyright 2014 Jon
Myerov 4
6. Customer Buying Behavior (CBB) Analysis Copyright 2014 Jon
Myerov 6 Customer Funding Customer Historical Award Behavior
Recent/Relevant Competitions Recent/Relevant Bids Recent/Relevant
Contracts The first step in conducting a PTW analysis is toThe
first step in conducting a PTW analysis is to determine how much
money the customer has todetermine how much money the customer has
to spend on your work scopespend on your work scope
7. What Does CBB Produce? Copyright 2014 Jon Myerov 7 CBB
establishes (a) the likely pricing scenario in play and (b) theCBB
establishes (a) the likely pricing scenario in play and (b) the
relative position of the winning price versus the
competitionrelative position of the winning price versus the
competition
8. Customer Available Funding Copyright 2014 Jon Myerov 8
QuestionQuestion Yes / NoYes / No Implication for Buy
andImplication for Buy and BudgetBudget Is this a repeat buy? Did
the customer conduct a market study? Did the customer receive any
ROM or unsolicited proposal prices? Did the customer use a
comparable project as the basis of budgeting this one? Did the
customer request pricing in an RFI? Never bid above the customers
available funding! (It happens.)Never bid above the customers
available funding! (It happens.)
9. Customer Historical Award Behavior Copyright 2014 Jon Myerov
9 Over years, customer buying behavior tends to be consistent Few
companies conduct any analyses of customer purchasing activity Look
at specific similar sales: who was selected and why? Lowest price
or price premium?
10. ANALYSIS #2: COMPETITOR TOP- DOWN ANALYSIS Copyright 2014
Jon Myerov 10
11. Competitor Top-Down Analysis (TDA) Copyright 2014 Jon
Myerov 11 Look at competitors past bids Understand work scope,
order size, delivery schedule, level of competition Use these to
establish a cost baseline Example: Start with competitor list price
Interview sales to determine discounting policies
12. Starting with Our Own Cost Baseline Copyright 2014 Jon
Myerov 12 Start with our own cost baseline on the bid Run down
customer requirements and generate estimates for each Be careful!
If cost estimates are inaccurate or contain inefficiencies,
competitor analysis will also suffer Cost baseline Should Price
Should Price = Our cost baseline minus costing and design
inefficiencies, plus profit margin Use Should Price to estimate
competitors bid price Adjust our estimates for differences in
competitors approach Identify key cost drivers against customer
requirements Remove features not required or desired by the
customer Identify our own potential trade-offs by interviewing
engineers USUS THEMTHEM
14. Competitor Bottom-Up Analysis (BUA) Copyright 2014 Jon
Myerov 14 First, determine the strongest competitor Focus PTW
energy on only this competitor, not on many (with rare exceptions)
Important to get the right competitor, in terms of price and
technical evaluation Do competitive and cost analysis until its
clear who the top one is Deduce the architecture of the competitors
likely solution Differences in architecture will drive most cost
variations, not labor and OH Focus also on positioning of the
competitor: variety-based, needs-based, or access-based (see
Porter) Create a BOM for all significant items in the competitors
technical approach
15. Copyright 2014 Jon Myerov 15 Cost BaselineCost Baseline
Should PriceShould Price Competitor BidCompetitor Bid
BaselineBaseline Revised ShouldRevised Should PricePrice
HardwareHardware DesignDesign ManufacturingManufacturing
Sensors/Sensors/ EquipmentEquipment SW DevelopmentSW Development
SEITSEIT ProgramProgram ManagementManagement ShippingShipping
G&AG&A ProfitProfit TOTALTOTAL
16. PUTTING IT ALL TOGETHER Copyright 2014 Jon Myerov 16
17. PTW Evaluation Copyright 2014 Jon Myerov 17 CBB + TDA + BUA
Determination where to price relative to competition Identify and
justify differences in value between our solution and the
competitions Commercial methodology for estimating value Government
methodology for estimating value
18. Commercial Methodology for Estimating Value Copyright 2014
Jon Myerov 18 Itemize key product and service discriminators of
ours and competitors Determine the buyers sophistication and
approach, based on history and intelligence Do they consider
discriminating factors in the evaluation? From the buyers POV, what
dollar value can be placed on discriminators? What confidence level
can be placed on this
19. Example Commercial Value Estimate Copyright 2014 Jon Myerov
19 Buyer ValuesBuyer Values UsUs CompetitorCompetitor Value (in
$M)Value (in $M) Value (in $M)Value (in $M) Completion Date 21
months $9 24 months -- Quality High $5 Fair -- Schedule Confidence
0 -- +1 month ($3) TotalTotal $14$14 Greater ValueGreater Value
$17$17 We can bid up to $17M higher than the competitor and still
win.We can bid up to $17M higher than the competitor and still
win.
20. Government Methodology for Estimating Value Copyright 2014
Jon Myerov 20 Duplicate customers proposal evaluation criteria (and
relative weighting) Score our offering and competitors against the
criteria Important to conduct review from the customers POV
Implement this evaluation as early in the pursuit as possible
21. Proposal Ratings A. Technical 60% 1. Technical Approach 40%
Merit a. Effective Range 7% Mar Out Out Outstanding b. Cruising
Altitude 7% HS Mar HS Highly Satisfactory c. Speed 7% Mar Out Sat
Satisfactory d. Sensor Capability 7% Mar HS Mar Marginal e.
Logistics and Readiness 6% Sat HS Unsat Unsatisfactory f. Ease of
Maintenance 6% HS Mar 2. Program and Schedule 20% a. Risk Analysis
5% Sat HS b. Ability to Achieve Schedule 5% HS HS VL Very Low c.
T&E Approach 5% Mar Sat Low Low d. SW Risk 5% Mar Sat Mod
Moderate B. Past Performance 10% High High C. Similar Experience
10% VH Very High D. Cost 20% Unk Unknown Total Score Low Mod HS Out
68%53% Merit Rating Weights Competitor Us Past Performance Risk Mar
HS Mar HS Mar Sat Example Proposal Scoring Copyright 2014 Jon
Myerov 21
22. Setting the Price and Cost Targets Copyright 2014 Jon
Myerov 22 The PTW target is the final price after all rounds of the
post proposal submittals or negotiation Develop negotiation
strategy after the PTW to set the proposal price PTW must be
derived early in the process to drive key solution elements PTW
process also should produce actionable recommendations for
improving competitive positioning PTW analysts must, with support
from functional organization leaders, set cost targets (i.e.,
bogies) Cost targets should include burdens, G&A, and fee Cost
targets should be tracked against functional estimates Important to
deploy cost targets before conducting estimates to help identify
scope challenges and right-size the design
23. Resources Copyright 2014 Jon Myerov 23 Winning the Big
Ones, Michael OGuin and Kim Kelly Campaign to Win: The 13
Commandments, Jay Herther Capture Guide: Winning Strategic
Business, Shipley Associates Powerful Proposals, David G. Pugh and
Terry R. Bacon
24. About Me Jonathan (Jon) Myerov Proposal Development
Manager, 12+ years with highly technical proposals and teams up to
50+ members 17 years teaching college writing and rhetoric Other
interests: Running, Trees/Gardening, Jazz CDs, Leadership People I
admire: Bill Belichick, Bill Cosby, Richard Feynman, James Madison,
Golda Meir Copyright 2014, Jonathan S. Myerov 24
25. Thank You Jon Myerov www.linkedin.com/in/jmyerov
twitter.com/JonMyerov Copyright 2014, Jonathan S. Myerov 25