Don’t Just Price –
Price-to-Win It!
Breakout Session #: C07
Jason L. Rupinski
Date: Monday, July 25
Time: 4:00pm–5:15pm
Agenda
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About the Presenter
Why Price-to-Win (PTW)
Defining PTW
The PTW Areas of Focus
Getting our PTW Started
Ethics
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About the Presenter
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Name:
Jason Rupinski
Position:
Sr. Principal Price-to-Win Strategist
Company:
Leidos
Email:
[email protected]
Phone:
719.474.8093
Bio:
Engages in and leads all aspects of the cradle-to-grave
strategic development of complex, large dollar value
pricing solutions for proposals. Over 21-year career he
has served as a Contracts Representative, Pricing
Analyst, Deputy Program Manager, and PTW Lead. He
volunteers his time serving on the Board of Directors
for the City of Colorado Springs Parks, Recreation, and
Cultural Services.
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Why Price-to-Win?
Can’t you just price my technical solution?
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Integrating PTW into Capture
How does price fit into your bid development?
Exemplar Approach to Business Development Cycle
Success Driven Model
PostSubmission
Traditional Bid Approach
Not Recommended for Use
Post Award PTW
Assessment
Final
Bid
Proposal
Final Bid
Price &
Solution
Price
(Cost + Fee)
Capture
Pursuit
Opp Qual
Proposed
Solution
Price
Strategy
PTW
Proposed
Solution
OPP ID
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Why PTW: The Reality is…
• As Sellers:
– No longer live in a world where a
superior technical offering and a
reasonable price will win the day!
– The value proposition is continually
drawn at or below “technically
acceptable, low price”
– Notice: not lowest price, but low-price
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Why PTW: The Reality is…
• Your pricing will make/break a deal…
– Therefore, be smart and begin early
– Determine the value proposition of your
supplies/services and how this matches:
• Corporate strategy
• Micro-level strategies augment higher level
strategies
• Where in your Market Segment you want to
play/price is important
– Be careful: by chasing low-price today,
you may be introducing a losing
proposition long-term
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Why PTW: The Reality is…
• Every entity needs revenue; hence, a need to
win and win consistently
• B&P dollars are harder to secure making each
pursuit ever more important; therefore, the
need to increase Probability of Win (Pwin)
• Need to accurately forecast the cost in order to
pinpoint an executable offering at a profitable
and winning price
• The price you charge determines your expected
Profit/Fee or buy-in position
• Fee/Profit is not a requirement of a Price
• Price could be lower than the estimated or
actual cost to perform
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Defining Price-to-Win (PTW)
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Defining Price-to-Win
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Price-to-Win (PTW) is an integral process in building a strategic
approach to critical capture decisions.
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“It is worth its weight in gold!”
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PTW provides a mechanism to understanding the overall competitive
position, risk tolerance, and results in an optimal bid strategy.
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The ultimate outcome is achieved through a series of alternative
“what-if” and “sensitivity” analysis yielding a solid business case that
enables management to make an informed and strategic decision.
Bottom-line:
PTW is the estimated price that, when integrated into the
Government’s source selection process, results in a
winning bid.
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Defining Price-to-Win
• PTW as a process:
– Involves a team reviewing and discussing internal
capabilities, customer expectations, and competitive
pressures
– Enables an analyst to build dynamic pricing and cost
models which incorporate detailed information on:
your own company, competitor(s), alternative
technical approaches/solutions, customer
relationships, supplier relationships, past
performance, bidding history, preferred insourcing/outsourcing approaches, etc.
– Built over time (i.e., iterations) and continually refined
as the PTW team’s knowledge grows and changes
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PTW Is Not…
• PTW is not an exact science nor can
the process provide 100% precision
towards the winning bid position
• Risk Free
– Performing Due Diligence on your data,
sources of data, risks, assumptions, and
everything else you model is vital to
ensure you avoid the pitfalls of GIGO
(Garbage In, Garbage Out)
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The PTW Areas of Focus
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Five Focal Areas of PTW
1. Opportunity Information
• Understand the nature of the solicitation
• Basically the Who, What, When, Where, & How
• Explicit & Implicit Requirements
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Five Focal Areas of PTW
2. Price-capability Tradeoff - Be able to answer
the question: How will the customer evaluate
the offering? (i.e., understand (Section M))
• Which Proposal Sections are evaluated and how
(e.g., scored (e.g., numerical or colored),
pass/fail, confidence rating, etc.)
• Understand the overall evaluation model (i.e.,
Lowest Price Technically Acceptable, Capability
Satisfied, Best Value Approach)
• Be able to articulate and demonstrate how the
customer’s evaluation model impacts the PTW
for all credible competitors
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Five Focal Areas of PTW
3. Customer’s Information
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Budget
Timing of Funding
Profile of Funding
Source of Funds (i.e., Color of Money)
Should-cost model
Independent Estimates
Prior purchases of similar nature and recent
award trends
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Five Focal Areas of PTW
4. Credible Competitor(s) Analysis
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Alliances or teaming
Prior bid positions/decisions
SWOT / Gap Analysis
Relative financial condition
Risk Assessment
Rate(s) Analysis
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Five Focal Areas of PTW
5. Our Team Analysis
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Alliances or teaming
Prior bid positions/decisions
SWOT / Gap Analysis
Risk Assessment
Supplies & Services Rate(s) Analysis
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Getting Our PTW Started…
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Getting Our PTW Started…
• The key to leading the PTW process is
decomposing 5 PTW focal areas into
manageable steps. So let’s get started!
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Step 1: Opportunity Description
Step 2: Identify the PTW Team/Resources
Step 3: Opportunity Information
Step 4: Customer Information
Step 5: Competitor and Market Information
Step 6: Our Team Analysis
Step 7: Modeling What-if & Sensitivity Analysis
Step 8: Repeat All Steps above as necessary!!!
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Step 1: Opportunity Description
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What:
– Determine “what-is-it?”
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Perhaps the best place to start any PTW activity is with
completion, even in-part, of an Opportunity Description
document (Opp Doc)
– A PTW Opp Doc captures salient components of the
opportunity. Four of the key areas are: opportunity
information, customer information, competitor information,
and our team information and capability data
– PTW is an iterative process and the PTW Opp Doc should
be updated throughout the course of capture activities
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Deliverable:
– A regularly up-to-date PTW Opp Doc
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Step 2: Identify the PTW Team
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What:
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Keep the team relatively small
Add members as needed to assist with collection of various
information, data calls, or management level decisions
Depending on the nature and size of the bid, a typical PTW
team may include representatives from Business Development,
Pricing, Program Management, Project Control, Contracts,
Subcontracts, Procurement, and other Subject Matter Experts
as needed
Caution: Remember that while this team contributes resources
and knowledge to support the PTW analysis and modeling
activities the overall PTW is competition sensitive and should be
treated as such
Deliverable:
–
PTW Org Chart for this specific opportunity
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Step 3: Opportunity Information
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What:
– In order to better understand the opportunity and gather
data from open source information providers, you are
encouraged to use the “Opportunity” information collected
via our PTW Opp Doc to secure more data from:
• Our internal opportunity MIS
• Use of 3rd competitive research and analysis services
for intelligence on the opportunity. Various subscriptionbased research firms are available
• FOIA Request – Securing FOIA data is often critical on
tasks that are being recompeted or are of a similar
nature to a new effort. Read up on the FOIA process,
understand how it works, and coordinate with the
capture leads on which contract(s) to FOIA and what
information to request
• Open Source Intelligence Searches
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Step 3: Opportunity Information
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Deliverable(s):
– Document each of the following:
• Findings: “capture the facts”
• Questions/Inquiries: develop questions and points of
inquiry for further research/exploration
• Assumptions: Remember, assumptions will be the basis
for the Risk Matrix and BOE artifacts that substantiate
our proposal submission
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Step 4: Customer Information
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What:
– Valuable information via researching the customer
– Not all information is important but you are seeking
information both germane to the solicitation in question as
well as those recent awards of a similar nature
– Research the customer using open resource sites
– Access the specific Agency website – each agency should
have a web-site. Visit their web-site and review award
announcements, briefings, other salient materials
germane to our capture effort
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Deliverable:
– A record of the salient customer information that may
influence the overall bid solution/strategy
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Step 5: Competitor/Market Info
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What:
– Researching the competition will yield valuable
information and insights that may help facilitate
modeling the competition’s bid position
– Not all information about a competitor is vital but we
are seeking nuggets about historical and recent
activities and actions that could influence what the
competition is thinking and methods to their
proposing strategy
– Again, all information comes from public open source
data
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Step 5: Competitor/Market Info
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Deliverable(s):
– Document findings: report the nuggets that may
impact this opportunity
– A SWOT analysis
– Price (i.e., Labor Rates & Quals, Avg Hrly Rates,
Solution Costs, win prices, etc.) information of the
Competitor and Subcontractors for future modeling
– Model the competitor’s Price Offering (i.e., leverage
the open source information above, note our
assumptions, and model the competitor’s price
offering
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Step 6: Our Own Team Analysis
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What:
– Naturally, valuable information can be garnered from
understanding our own company and teammates.
Our competition is just as hungry to understand and
model our moves and will be searching open source
data to better understand our go-in position
– A key point in this step is to look at our Team as the
competition would view us
– You’ll use the information you gather in this step to
help build a bottom-up model of our team
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Step 6: Our Own Team Analysis
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Deliverable(s):
– SWOT Analysis
– Balance of Technical, Schedule, and Risk as it
relates to Cost Trade-off
– Team Labor Rate Analysis
– Non-labor Cost Assessment
– Model our team’s Price (Top-down)
– Team Wrap Rate Assessment
– And so on….
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Step 7: Modeling and Analysis
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What:
– Developing our team’s business model on “how-to”
achieve the recommended PTW Target is completed
through modeling and analysis of those technical,
schedule, and resource driven cost levers that can
tactically impact our price offering
– Metrics are an important but not without the analysis
regarding: customer/client, internal research/capabilities,
the assumptions, competitive and market research, and
other attributes supporting the best offering
– A key component is to modeling those tactics that can be
leveraged to enable our team to “hit the target”
– In building an analysis and metrics for any tactic, be sure
to measure the impact of each change. Not only with
respect to price but non-price factors (i.e., changes to:
assumptions, operational impact, risk, etc.)
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Step 7: Modeling and Analysis
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Deliverables:
– Dash board financials/metrics
– Model our team’s go-in position (i.e., bottom-up
model (finalized closer to RFP release))
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Notes:
– Management does not need to see all our
calculations and detail
– Summary dashboard reports are most helpful.
• Show metrics that are relevant to our particular situation
and business case
– Use metrics and reporting points of interest that
impact how we view various cost drivers in our
modeling and represent charts that have been helpful
in viewing our bids
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Step 8: Rinse, Wash, & Repeat
• Remember…
– Start Early!
– The process is iterative
– The assumptions and the facts will change as new
information is learned throughout the life-cycle
– Therefore, repeat steps 1-7 as necessary to refine
and complete the process
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Ethics
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Ethics
• The Importance of Ethics:
– Open Source Information
– Strictly follow Business’ Ethics and
Compliance Guidelines.
– Never take shortcuts in your research.
– Never jeopardize your company’s, team’s, or
personal ethical standards.
– Be Sure to Know:
• Where your information comes from…
• How and when you may use information…
• When to say no to others!
– Take the high road at all times.
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Conclusion
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The Reality is…
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In order to avoid failure, steer clear of…
– Last minute price tactics that could sink your proposal.
– Thinking about price as an afterthought or a mere result of
the technical solution
– Reactive price tactics are not strategies and often only
serve to diminish the value of your offering
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You must reshape your capture cycle to think about
Price upfront!
Create a Disciplined but Flexible Process
Due Diligence is vital
Understand your overall goals and objectives before
you get started
Be Ethical
Rinse, Wash, Repeat
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Contact Information
• Jason Rupinski
– Organization: Leidos
– Email: [email protected]
– Phone: 719.474.8093
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Back-up
(Thought Exercise - As Time Allows)
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Thought Exercise: (As Time Allows)
The Art & Science of PTW
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The Art & Science of PTW
• PTW is a mix of Science and Art
• Terms are not polar opposites but exist
along a continuum
Science
Art
Objective
Rational
Unbiased
Factual
Observed Natural Order
Probabilities
Solves Problems
General Laws
Subjective
Open Ended
Emotional
Meanings - Feelings - Viewpoints
Justification of Thought/Ideas
Possibilities
Connects Expressions
Aesthetics
Reason & Development
Creativity
Neither "Needs" the other but they do co-exist
Beauty
Expressive
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Talking Point Chart: Widget “X”
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Design, Build, and Deliver “N” units of Widget “X”
5 Focal Areas of PTW
1 - Opp Info
2 - Price Capability Trade-off
3 - Customer Info
4 - Credible Competitor Info
5 - Our Team Analysis
Widget "X"
Team "A" Price
$117
Science
Art
Cost of Resources
Source of Resources
Amount of Resources-historical Amount of Resources-future
Learning Curve-formula
Learning Curve-application
Range of Widget "X" Prices in the Current Market Space
Initial
Range
$99
$102
$105
$108
$111
$114
$117
$120
$123
$126
$129
$132
$135
$138
$141
$144
$147
$150
$153
$156
$159
$162
$165
%Δ
n/a
3.0%
6.1%
9.1%
12.1%
15.2%
18.2%
21.2%
24.2%
27.3%
30.3%
33.3%
36.4%
39.4%
42.4%
45.5%
48.5%
51.5%
54.5%
57.6%
60.6%
63.6%
66.7%
Spec Adj
Range
$99
$102
$105
$108
$111
$114
$117
$120
$123
$126
$129
$132
$135
$138
$141
$144
$147
$150
$153
$156
$159
$162
$165
%Δ
Below Performance
Specification
n/a
2.6%
5.1%
7.7%
10.3%
Notional
12.8%
Range of
15.4%
Competitive
17.9%
Offerings
20.5%
23.1%
25.6%
28.2%
30.8%
Min
Avg
Max
Comp
All
Range
$99
$117
$132
$135
$165
$153
Above Price
Tolerance
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