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5 Pricing Tips for the New Year

As we enter a new calendar year, we begin the madness of sharpening our budgets and pipelines.  Some of the focus ends up being on managing expenses and headcount, as it should, but often some quick and easy planning can help you to optimize your pricing strategy for the next year.

To get you started, here are five pricing tips for the new year:

  1. Contract Labor Bill Rate Review
    Have you had any staff turnover on your firm fixed price or time and materials contracts? If so, you may be able to capture some labor efficiencies by “greening” those positions and/or consolidating functions under higher bill rate positions. BONUS TIP: This is especially helpful if the contract is up for a re-competition and you’re the incumbent.
  2. Cost-Plus Contracts
    If your Cost-Plus contract is coming up for a re-compete, review all of the direct labor rates, and examine them against market rates (such as a survey or government rate data such as Bureau of Labor Statistics).  Bid market rates, NOT current employee rates.
  3. Subcontract Review
    Are there opportunities to bring in new subcontractors of the same quality/scope, but with better rates? This might be dependent on teaming agreements and workshare commitments. If the contract allows it, develop an active strategy around subcontractor selection and rates every year.
  4. Overhead & Infrastructure Review
    Facilities – this is a big one. Are there opportunities to renew different types of leases/facilities?  You may want to explore the trend of shared/co-working spaces. This solution can provide a lot of cost efficiencies if your contract/company policy allows it. Telecom expenses are also a major player. There are a multitude of new options that minimize the telecom costs for entire companies through third-party vendors and resellers, or cost sharing with other companies. Do your homework and save your company money in the long run.
  5. Beef Up Your Back Office Support
    Can you outsource major functions such as accounting, HR, recruiting, contracts? Believe it or not, this is becoming a good option for many mid-tier contractors. Use this opportunity to get lean without sacrificing quality and compliance standards.

The tips above are not a one-and-done type of deal. You should be reviewing internally each year as you plan operations and execution of contracts for the new year.  While much of this is common sense, seldom is it applied to affect pricing strategy/updates.  Use this information to bid sharper and smarter than your competitors and get the edge in pricing!

The Gift of Expertise

Ever feel like you have no clue how to solve a problem or that there has to be an answer out there, you just don’t know it?  Do you google randomly trying to figure it out, only to not be satisfied with the results?  Or (if you are like me), do you just want someone to freaking deal with it and tell you what to do in this circumstance?  Do you feel like you know it’s important, but there are a ton of things that you’d rather be doing or should focus on?

As you plan for 2019, be thinking about what expertise you need in the new year.  What will help move your business forward and, more importantly, grow your profit?  What is worthy of your time and what isn’t?  When do you play it safe with an outside opinion?  (answer:  Anything with a ton of money on the line or employee issues – call the expert!).

Here’s a short list of items that folks waste time on by doing it themselves instead of calling an expert to save a ton of time and in the right circumstances, a ton of money:

  • Affirmative Action Plans
  • Taxes
  • GSA Schedules
  • Employee handbooks
  • Policies and Procedures (to start)
  • CMMI/ISO certification
  • Office Space/Office Moves
  • FAR Compliance
  • Proposal Price/Cost Volume development and Analysis
  • Indirect Rates development and Analysis
  • Strategic Pricing/Price to Win Analysis
  • M&A (when you don’t have a shop of your own)
  • Website development
  • Complex IT Challenges
  • Bookkeeping
  • Graphic Design
  • Payroll

This holiday season, give yourself the gift of getting crap off your plate.  Budget for using an expert in one or more of these areas next year.  Reclaim your time!

If you need a referral or recommendation to anyone providing these services, just give us a shout.