Fundamentals of Pricing Methodology
Nov/Dec 1999The Foundation The Foundation for Pricing When it comes to your price, you need to know: 1. ... If he cannot, this may lead you to other pricing strategies. ... The last step in building your pricing foundation is to organize the information. ... You have to see how the various bits of cost estimating data relate to each other and to the overall pricing objective. Only then can you proceed to the “art” part of good pricing—taking the accumulated facts and turning them into a price that can win. ... If you don’t have the foundation of a good cost estimate, your “art of pricing” will be more like child’s finger painting than the masterful strokes of a Van Gogh or Rembrandt. The Art and Science of Pricing Setting the price of a program is a combination of art and science. ... b) Good pricing follows a repeatable process: you take the same types of actions at generally the same times in every proposal. The “art” aspect of good pricing is: a) While lots of factual data and quantitative analysis are essential, there are also many subjective elements that cannot be quantified. ... The foundation of both the art and science of good pricing is a good cost estimate. ... • Other costs: The basis for pricing these items should be provided. ... Expected individual rates may be either estimated separately for each proposal or pre-established for pricing many proposals submitted over a given period of time. ... Include pricing in the executive summary unless prohibited. ... Substantiate cost or pricing with past performance data. ... Include pricing in the executive summary unless prohibited. ... Graphic presentation of cost and pricing data elevates the analysis to the level where best value decisions can be made. ... Substantiate cost or pricing with past performance data.