Can You Recover the Cost of Writing a Proposal?


What about charging for a proposal? Does that ever make sense? Usually it doesn't. Your potential clients will probably refuse to consider such a request. They view the proposal as a cost of doing business that you should be willing to bear, and they assume that your pricing will include enough margin to recoup your sales and marketing costs, including proposal writing.

However, there are times when you may be tempted to attach a bill to your proposal, or to withhold detailed content until the client has agreed to pay you for it. For example, you might be justified in charging for your proposal if it:

  • Required thousands of dollars worth of effort on your part, with a low probability of receiving an order because of the client's apparent indecision or lack of commitment.

  • Involved R&D or design work that is highly specialized or even unique to the given opportunity, the kind of work you will not be able to use again for any other client.

  • Was developed for a client who refused to sign a nondisclosure agreement.

What options do you have in such cases?

Consider seeking a preliminary letter of commitment from the client. During the pre-proposal phase of your efforts, contact the decision maker and explain that you will be making a sizable investment in gathering data, conducting tests, allocating laboratory time, or using other expensive means of preparing the content for the proposal. What you want from the client is his or her signature on a letter stating that if your proposal addresses all the key technical requirements and is within the client's budget, you will receive a contract. This kind of commitment is never easy to obtain, of course, but you have a chance if you are pursuing a proactive opportunity. If you are responding to an RFP that the client has issued to several vendors, you can probably forget it.

Another option is to break the opportunity down into manageable chunks. If you're interested in the opportunity, but unable to calculate the true costs of winning, you might be able to respond with a proposal that calls for doing the work in phases. Phase I might be a funded design study that would lay out a plan for doing the subsequent phases. To tempt the client, you might offer to deliver the subsequent phases on a fixed-price basis, to engage in revenue sharing, or to offer service-level guarantees.

A final option is to respond with a two-volume proposal. Volume one contains your executive summary, high-level information about your proposed solution, information on your management plan, case studies, references, and other general data. This volume is offered to the customer at no charge. The second volume contains your detailed design and specifications. This volume is available to the client on a fee basis, representing the amount of engineering or design effort that went into it. As an incentive, you might indicate that the fee for this volume will be deducted from the project costs if you win the contract.

Before you decide on taking this approach, be realistic about the amount of effort required and the strength of your position compared to that of your competitors. It can be an extremely tough sell. However, if you find that you are doing a lot of "free consulting work" by responding to detailed RFPs and RFIs that never result in orders—that are, in fact, used as project plans and shopping lists by the client—then this approach can serve as a wake-up call that your intellectual capital is no longer available for free.




Persuasive Business Proposals. Writing to Win More Customers, Clients, and Contracts
Persuasive Business Proposals: Writing to Win More Customers, Clients, and Contracts
ISBN: 0814471536
EAN: 2147483647
Year: 2004
Pages: 130
Authors: Tom Sant

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