OnDemand WTP Pricing Research

Pricing Strategies for Small Government Contractors | Deltek

Competitive Pricing Strategies for Government Contractors
The following pricing techniques may vary based on solicitation requirements and the type of contract.  Also, contractors with a Forward Pricing Rate Agreement cannot utilize most of these techniques.

FEE STRUCTURE
Modifying the fee structure is the simplest way to be more competitive on the pricing while still maintaining a level of profitability.  Many times the fee percentage can be reduced to a level that still allows for a modest profit.  In other cases, the pricing allows for an award fee and a base fee.  The contractor will opt for a lower base fee and bank on making money in the award fee.   This shows the contractor’s confidence in their ability to perform well enough to maximize the award fee.

POOL STRUCTURES
Contractors may want to look at their indirect rate structure to find ways to be more competitive with their pricing.  This technique can be tricky and should be analyzed carefully to make sure other contracts are not impacted by these decisions.  This technique may involve contract specific fringe or overhead pools, utilizing on-site vs off-site overhead pools, or creating a handling pool.   While modifying your indirect rate structure may help the contract being proposed, it could have a negative impact on other contracts.   The impact on future work should also be considered.

Read complete article here:

Pricing Strategies for Small Government Contractors | Deltek.