How to Come Up with the Best Price ...

How to Come Up with the Best Price for Your Government Bid

Coming up with the best price for the product or service that you want to offer to the government means creating a balance in trying to generate profit for your business while still making a competitive bid. And when it comes to deciding on how to price your bid on the government contracting business, there is no question that you should be more knowledgeable on this than other people would be.

Take note that with the great variety of businesses out there and an equally vast number of pricing methods, the smartest thing to do would be to remain as competitive as you can in your target market. Determining the right price for your bid means having to consider the following factors:

  • The Price History of a Product (or Service). Obtain the price history of the item or product from the buying government agency. You can ask help from the Point of Contact noted in the contract or from the Procurement Technical Assistance Center. You may also get in touch with the contracting officer who can provide you with previous contract numbers so you can check the figures on those documents. Be sure however that you’re looking at the same contract statements so you get a more accurate price comparison.
  • Bidding Costs and Expenses. While other contracting opportunities are simple and inexpensive, other larger contracts can be more arduous and time-consuming—and therefore more costly. Here, it helps to follow the rule of thumb: an estimated cost of putting together a government bid can run around 3% to 4% from a proposed contract’s value. Also, be sure to have your business ready to handle this cost.
  • Quality and Certification Requirements. Be aware of all the necessary licenses, certifications, and acknowledgments and know if acquiring them would mean paying more so you will eliminate any surprise expenses all the way.
  • Other Special Requirements. Be sure to get all the requirements that the buyer needs. Do not bank on just a percentage of the cost of the item to cover for additional requirements like packaging, transporting, etc., as they can sometimes be more costly than you think, and can eat it up on your supposedly profit.
  • Overheads and Profit. Remember that while you always have the free reign on inputting as much profit as you like, you have to win the contract first before you can finally enjoy that profit you have in mind—and the government contract bidding process is one tough and competitive arena. Take note too that while having your price cover all your overhead costs appear simple and basic, there’s still this pricing factor that many small businesses still cannot seem to get right: if you cannot come up with the right cost information, then you’d have difficulty making the right decisions for your business, correctly bid on a contract, and be ultimately competitive.