What CompetitionSmart thinks matters in Price to Win (PTW) Strategy

Competition Smart (CSmart) has developed a highly effective approach to price-to-win analyses. We have more than 15 years of PTW experience and nine years as a standalone company doing PTW (along with other strategic things).  

Understanding and focusing on high-quality inputs is key to creating a PTW that is tailored to your opportunity, your competitors on the opportunity, and the nuances required to win the opportunity.

We know that no two opportunities are the same. So why approach them in the same manner?

Here is a look at what we think makes for a good PTW analysis. 

1. Full Data Ingestion – We use every piece of pricing data that is publicly available. Every. Single. Piece. While some data is easy to access (like Schedule pricing on competitors) other data is more challenging to gather. CSmart discovered these non-traditional sources (like protest data or salary transparency data) are more valuable than traditional data used by most in price-to-win analyses. To ensure we can efficiently and effectively gather this information, we’ve developed proprietary tools and techniques to streamline the process.

• How this Benefits the PTW Result – CSmart embraces that all data can be meaningful to PTW and to the analyses of each competitor. Don’t cut corners on the data collection process, but make a point to ingest and consider it all.

2. Statistical Weightings Applied to Data – Now that you’ve gathered ALL of the data, it’s time to acknowledge – not all data is created equal. In recognition of this, we apply a proprietary methodology to identify the most important data elements and price drivers specific to each opportunity. Once identified we apply another methodology to assign weightings to each element. This precise and tactical model exposes which data is the most significant, related to the behavior of each competitor who is pursuing the opportunity. 

Here is a simple example of how our model weights data elements. Knowing the GSA MAS labor categories and rates of a competitor is a data element that most will know and use in their PTW analyses. It’s also a set of ceiling rates that are almost never bid at their full value due to spot discounting behavior. Our model applies a significantly lower weighting to that data element (if any weight at all) than what is given to the rate data the same competitor was awarded on a similar contract. That known rate data, which is typically something we derive from multiple sources, is more valuable to us and therefore receives a higher weighting. 

• How this Benefits the PTW Result – Our focus on what really matters to each competitor on an opportunity drives the analysis of the PTW and of each competitor. Because how a competitor behaves will never be completely static, this approach ensures we model how they should behave on the opportunity.

3. Competitor Focus – We “build” the price we think each of the competitors will use based on all the data we gather on each of them. This data is not just pricing data, but data that will tell us how they will approach this deal and how aggressive they will be. The key to understanding a competitor’s approach is to get inside their heads and understand their solution, win themes, how they will approach the deal, and ultimately how they will price a solution. It takes time, but it’s worth the effort because you’re not competing against a random set of rates, you’re competing against a group of professionals who want to win as badly as you do.

• How this Benefits the PTW Result – In a PTW analysis we are not trying to beat a generic set of prices. We are trying to beat a set of likely competitors who have determined what they think is a competitive price and a technical/business solution that will score high technically. Our tailored analysis for each competitor exposes where they should score technically and what price they should bid. Once we have determined their expected scores and prices, we have a clear picture of what we are competing against. 

4. Government Expectations – We also model what we think the government expects the contract to cost by using the same process and inputs the government uses when they develop their Independent Government Cost Estimate (IGCE). We simply recreate the same estimate for our use. This provides yet another pricing parameter because it reflects the “truth” the government created for itself.

• How this Benefits the PTW Result – There are opportunities where the government simply has it wrong on what they think a contract should cost. Through the IGCE analysis, we discover if there is a large discrepancy between what the government thinks and reality. When our bid is largely different than what government officials are anticipating, we meticulously explain why our price and technical solution are in fact an accurate reflection of the work under the contract. This in-depth explanation helps the government understand why their IGCE was off and why our bid was on target. Providing this analysis work to the government eliminates the risk of not receiving an award because the government official(s) were stuck in figuring out how to justify it – we do the justification for them.

5. Top-Down Analysis – When there is an incumbent contract to analyze, we use that as well as it is another point of “truth” for both the government and other competitors. This serves as a leveling point because all competitors will know the same number and factor it in as the high watermark in their price-to-win analysis.

• How this Benefits the PTW Result – As the easiest piece of price data to gather, we know that our competitors will know and use this number as the maximum value of the contract going forward. We use it only to calibrate the thinking of others, not to generate their likely price. Note, if significant scope change is expected from the incumbent contract to the instant opportunity, then we disregard the Top-Down Analysis and work from the bottom up.

6. PTW Model – The price-to-win model mirrors the exact methodology the government will use and the evaluation factors they will use. We create the price for each competitor. We create the technical scoring for each competitor. Then we run them all through the evaluation model and it will derive the PTW for our offer based on our expected technical evaluation/scoring. Our PTW is based on the price we need to bid to win by a single point given the technical score we expect our proposal to achieve. 

• How this Benefits the PTW Result – By mirroring the exact evaluation factors and methodology the government will use, we are able to derive the PTW based on beating our competitors by just enough and not leaving money on the table.

CSmart’s last key data source is our carefully curated, proprietary database. During the nine years of doing PTW work, we developed an extensive database of competitors we use to feed into their pricing builds and their technical scoring for the evaluation in the PTW Model.