I could write a book about pricing. In fact, in my Proposal Development Secrets book, I devote two whole chapters to pricing.
But here are the basics you must understand when putting your pricing together.
There are three common ways to price:
- Lump Sum
- Hourly with a Not To Exceed Price.
If you do lump sum pricing, you should break down the costs in a table. If you do hourly pricing, you should break out the hourly rates for each category of person working on the project.
If an RFP requests specific pricing information, you better provide it.
Reimbursable expenses are costs (like travel, printing, etc.) that are not included in your price but you will incur during the execution of your work. Typically, these costs are billed to the client “at cost” or with a 10% markup. You need to address reimbursable expenses in your proposal, otherwise don’t expect to get reimbursed for them.
If you have any payment terms, like “net 30,” you need to state them in your pricing or attach terms and conditions.
Assumptions and Clarifications
In this portion of the pricing, you should indicate the assumptions your pricing is based upon. For example, if you are proposing to provide tree removal services, then one of your assumptions is probably:
We assume there are no underground gas lines within five feet of this tree.
If you start digging a tree up and hit an underground gas line, that’s going to be expensive. That’s just one example of why assumptions and clarifications are so important.
Identify every assumption and be very clear about what you won’t be providing.