As a government contractor, one of the most pressing questions remains – How much does price matter? The simple answer is – A LOT, especially when it comes to winning government contracts.

With increased competition and budget constraints, employing strategic pricing is more critical now than ever before. Even when price isn’t directly scored in the evaluation process, it can still be the deciding factor in who wins the contract.

The Role of Price in Government Contracting

In the world of government contracting, price is an essential factor. Government agencies must balance their budget constraints with the need to select qualified contractors who can deliver high-quality products or services. As a result, price plays a significant role in determining which contractor is awarded the contract.

However, it’s important to note that price is just one factor in the government’s evaluation process. Other factors, such as technical capabilities, past performance, and management approach, also play a role.

Nevertheless, if two contractors are similarly qualified, price is primarily the deciding factor. This is why strategic pricing is crucial for government contractors.

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Strategic Pricing: Key Considerations for Government Contractors

To maximize your chances of winning a government contract, you must develop a strategic pricing approach. Here are some key considerations to help you get started:

Understand the evaluation criteria: Familiarize yourself with the government’s evaluation criteria and scoring system for the specific contract opportunity. This will help you determine how much emphasis is placed on price and other factors which can drive your pricing strategy.

Conduct market research: Research the prices of similar products or services in the market, as well as the pricing strategies of your competitors. This information will help you establish a competitive price that aligns with the government’s expectations. A tool for targeted market research such as Market Intel can give you the advantage of knowing how much your competitors charge for their products or services.

Optimize your cost structure: Identify ways to reduce costs without compromising quality. Streamline your operations, implement cost-effective technologies, and negotiate with suppliers to achieve better pricing. Lower costs can enable you to offer a more competitive price while maintaining profitability.

Consider value-added services: Offering additional services or unique benefits can make your proposal more attractive, even if your price is not the lowest. Value-added services can provide a competitive edge and help justify a higher price point.

Maintain pricing flexibility: Be prepared to adjust your pricing strategy in response to changes in the market or feedback from the government. By maintaining flexibility, you can adapt quickly and stay competitive.

Set-Aside Contract Pricing Preference: The government limits competition for certain contracts to businesses certified in socio-economic categories. Businesses HUBZone or 8(a) Business Development certified can be given up to 10% pricing preference of the contract amount in full and open competition. For example, a bid price of $100,000 is treated as $90,000 when compared to non-certified competitors.

Strategic pricing is an essential aspect of government contracting. By understanding the evaluation criteria, conducting market research, optimizing costs, offering value-added services, and maintaining pricing flexibility, you can increase your chances of winning government contracts.

Remember, even when price is not the primary evaluation factor, it can still be the deciding factor in determining which contractor is awarded the contract. Don’t underestimate the importance of strategic pricing in government contracting – your success may depend on it.

FedBiz Access (“FedBiz”) has an experienced team that works with small businesses and takes the time to get to know their business and ask questions to ensure they have a solid contracting plan. FedBiz is a leading government contracting business development and marketing firm that provides engagement strategy coaching, as well as SAM & DSBS registration, set-aside certification registrations, GSA Schedules, and targeted market research.

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