Price To Win: What It Is And When Estimation Gets Involved
I am continually amazed at the wide variety of opinions about what Price-To-Win is and who plays what role in Price-To-Win.
I have spoken to some customers that are offended by the term Price-To-Win. They hear it as “trick the customer to win.” Of course that is not what price-to-win is all about. Price-to-Win is about choosing the most affordable alternative that fulfills the customer need and that also will be successful against competition.
Price-To-Win Goals
Price-to-Win identifies the correct balance of capability that can be delivered to the customer at the value the customer wants. Price-to-Win provides management insight for:
- Competitive positioning
- Strategic partnering
- Risk tolerance
- Customer relations
- Optimal bid strategy
This information is derived by:
- Market inputs
- Engineering identification of viable alternatives
- Engineering architectural design of each alternative
- Cost and risk analysis of alternatives and risk alternatives
- Price analysis (cost and price are two different issues)
Price-To-Win 8 Step Process
Step 1: Gather market intelligence: Marketing personnel identify competitors possible strategies and
Step 2: Determine requirements & features
Step 3: Sketch out Architecture Design
Step 5. Determine viable alternatives
Step 6: Cost Analysis & Estimation of Alternatives
Step 7: Select best alternative
Step 8: Establish price
Galorath Role in Price-To-Win
Galorath and SEER primarily support the estimation and analysis of alternatives, taking inputs from engineering, marketing and others. The result of this includes cost and cost risk. Once that cost is determined, price analysis will determine the actual price to bid. This price may vary significantly from the cost based on business decisions.
Thank you for reading “Dan on Estimating”, if you would like more information about Galorath’s estimation models, please visit our contact page, call us at +1 310 414-3222 or click a button below to ask sales questions, sign up for our free library or schedule a demo.
This post was written by
Dan Galorath is the President and CEO of Galorath Incorporated and the chief architect of SEER-SEM, an algorithmic project management software application. He is a recognized expert in the fields of software estimation and sizing and the author of Software Sizing, Estimation, and Risk Management.
Comments
Project Prediction Infographic
Excellent process to determine the right Price-to-Win based on the requirements and the affordability level from the customer. SEER is a very good support for this process. This is what we at Ordina do in the Estimating part of our process.
For the ultimate Price-to-Win you still need the Beat-the-Competition part to get the contract when you are bidding in competition. This is what we at Ordina do in the Estimating part of our process.
More information on our model is available on https://www.box.net/s/40ocnekvqd4uyug9yq7a.