Day 1 of the APMP India Diwali gift series, Dhanteras, the day families invest in what grows value.
The Price Decides the Deal
Pricing strategy, pricing structures and the role of the bid professional.
On Dhanteras we buy what will hold and grow its worth. A deal is the same. The price you put on the table decides what the work is worth, what it costs to deliver, and whether anyone thanks you for winning it.
Start exploringWhy price is a strategy, not a number
Cost
Cost tells you the floor. It is what you must recover. It is not a price.
Value
Value tells you the ceiling. It is what the result is worth to the buyer.
Structure
Structure decides who carries which risk, and when money moves.
Most bid teams are handed a number late and asked to present it well. The teams that change outcomes get into the pricing conversation early, because the structure is argued before the number is fixed.
Pricing structure explorer
Select a structure to see how it works.
Fixed price
- What it is
- One agreed amount for a defined scope or deliverable.
- Best fits
- Scope is clear and bounded, and you have delivered this kind of work before.
- Risk sits with
- The seller. Any overrun is yours.
- What the bid must prove
- That the scope is complete, that assumptions are written down, and that change control is workable.
- Common trap
- A fixed price on a scope the buyer has not finished defining.
Who carries the risk
Move the scale to see where each structure places the risk.
Time and materials with a rate card
Risk sits with: The buyer. The buyer pays for the effort used.
Price is the reward for the risk you agree to carry. Never move a structure without re-pricing the risk.
Choose a structure
This is a thinking aid, not a decision.
Question 1 of 4
How clear is the scope?
The same scope, priced three ways
Hypothetical A three-year managed service for an enterprise buyer.
| How revenue is earned | One agreed annual charge, invoiced in equal instalments across three years. |
|---|---|
| What the buyer worries about | Paying for capacity it may not use, and how changes will be priced. |
| What the bid team must build into the proposal | A complete scope, written assumptions, service levels and a clear change process. |
The scope did not change, but the value of the deal did.
A simple margin view
Hypothetical Adjust the figures to see where a discount lands.
₹80,00,000
- Price at target margin₹80,00,000 ÷ (1 − 20%)
- ₹1,00,00,000
- Margin at target
- ₹20,00,000
- Discount (10%)
- − ₹10,00,000
- Resulting price
- ₹90,00,000
- Resulting margin
- ₹10,00,000
A discount comes out of margin, not out of cost. The cost stays the same.
Here, a 10 per cent discount on a 20 per cent margin removes 50 per cent of the profit.
What this means for your next bid
- 1Ask for the pricing structure before you ask for the number.
- 2Write the assumptions that the price depends on, and put them in the proposal.
- 3Name the risks you are being paid to carry, and check that the price pays for them.
- 4Make the price easy to compare with what the buyer asked for.
- 5Say what changes the price, and how, before the buyer has to ask.
Pricing strategy decides the value of a deal, and the bid professional who understands it stops writing documents and starts contributing value.
