Alternative Tender Tools- Price versus Value

In your industry, and particularly when tendering to government, and looking at the tactics some competitors use in the battle to capture the contract, to what extent is price the weapon of choice? 

Do you seek to compete on that basis?  Or do you have other weapons?

Creating low-price appeal is often the tactic used, but the result of one retaliatory price slashing after another is often a precipitous decline in your profits.

Don’t do this!  In an effort to secure that valuable contract, it can be so tempting to slash the price to make your tender irresistible.

It’s hard to combat the temptation, but you must.

I’ve heard comments such as :

“They must be desperate, and you would have to ask Why?”  Instant doubt about your business and or product/service offering.

“If that is all they are charging, they can’t be any good!”  Putting you down.

Imagine going to a car dealer and getting a quote on a good new vehicle, and being told by the salesman “For you, we’ve got a special price of just $10,000.”  You would immediately be wary and wonder what the catch was, as well as the likelihood of ongoing service.

So, when responding to that Request for Tender, it is preferable to consider other options before starting a race to the bottom.

When a potential client such as a government agency is thinking about procuring the types of products and services you sell, they will usually seek to go into the market through an open tender to meet their need.  

The challenge for you is to find the basis to win on other than the lowest possible price.

Competitive pricing is one drawcard for potential customers when vetting their options, but it’s not the be-all and end-all.  In fact, research has shown that customers have a tendency to associate price with the quality of the product or service – so the higher the price, the better the quality.

With this in mind, it’s crucial not to undersell and undervalue whatever it is you’re bringing to the table otherwise you’re starting off on the wrong foot. 

Almost invariably, buyers make their procurement decision on Value.  The key to justifying your worth is to offer real and impactful value to the agency.

Prices can be part of your message about your difference from “the mob”.  You may have heard comments along the line of “If they charge that much, they must be good!”

But you can’t leave winning to a perception.  You must give the Assessors of the tender something they can hang their hat on, and justify their decision to their superiors.

And that comes back to highlighting your point of difference.  It must be a point of difference that is important to that client, and justifies the price you are quoting.  Now that is value, compelling, and credible.

Doing so requires having a good understanding of the agency’s requirements.  It helps if you can do this before the tender comes out.  In my aviation industry days, we used to say, “By the time the tender comes out, it is too late!”

That requires developing relationships with key players in the agencies likely to be requiring your products or services.

It also requires having a good understanding of your key competitor’s strengths and weaknesses to establish points of difference which could be highlighted in your response.

It is important not to undersell and undervalue what you are bringing to the table otherwise you are starting off on the wrong foot.

Know your Unique Selling Point (USP) so you can develop a Value Proposition around which to develop your compelling and persuasive response.  

If you’ve done your research, then your product should be unique enough that you’ll never need to compete on price, unless you want a race to the bottom.  Put forward a product or service that solves their problem and doesn’t compromise on your USP.

As I said in “Your Tendering Dilemma”,  “If you can find that one thing, and focus on whom you are and what you will do around that one thing to meet this client’s requirement, you will find developing your response both easier, and more targeted. 

I’ve written further on this subject in “When Quoting, Is Price the Only Thing?”

And most importantly, it will make it much easier for the potential client to choose you and stick with you.”

Highlight your point of differentiation; show – don’t tell – the Assessors why you’re the best choice for them and demonstrate knowledge and credibility.  

Value rarely lies in the lowest price.  If your focus is on price alone, you may win the occasional skirmish, but never the war!

What is your experience?

If you are less than successful in tendering to government I’d be interested in your experience, and the challenges and fears you face when tendering to Governments.  What have you found, what are you looking for to help you, and what have you learnt?  This email address is being protected from spambots. You need JavaScript enabled to view it.

I’m working on a new online course to help people transform their success rate in tendering, while reducing the time and stress involved, and would like to build your experience into the design of the modules.

If you would like to discuss your experience with me, This email address is being protected from spambots. You need JavaScript enabled to view it.I’m interested in learning more.

And if you would like to understand more about my approach to tendering go to www.catalysnt.com.au.  You might like to download my freebie – “How to Overcome the 10 Most Common Mistakes in Tendering”.

© Copyright 2021 Adam Gordon, TenderWins 

Catalyst Consulting

Do You Wonder Why Some Businesses Win More Tenders than Others?

Then wonder no more!

Catalyst Consulting - Your Partner in Tendering Success.

Get In Touch

12 Queen Street

Yamba 2464 NSW

Phone: 02 6646 1474

Fax: 02 6646 8617

Mobile: 0413 120 480

Email: email@