Many pricing managers do not have the luxury of a fixed price. This is especially true in negotiated deal.
Think of a Request for Proposal (RFP) for an software service or Engineering, Procurement and Construction (EPC). Every such deal is different. A bidder needs to craft an offering and its corresponding price afresh every time.
What should be the opening price bid for such a deal and what discounts should be planned?
While many companies use a cost plus mark-up model, this is a fraught with risks which is a topic of another blog post. So what the managers need is an objective way to assess their price bid.
What is Price Negotiation Tool ? Price Negotiation Tool helps the clients with detailed negotiation planning with help of market insights.
How is it done? Pricology team evaluates and scores the strength and weaknesses of the market participants including that of the buyer.
Then the procurement process is studied to model the decision criteria of the buyer.
The past win/loss data of the client is used to improve the models.
These findings are used to define the opening price. Various possible end states of the negotiations are identified with probabilities, which are constantly updated during the deal cycle. These end states also help us plan the conditional discounts.
The cost data helps identify the walk away price. A detailed terms sheet negotiation plan is worked out which includes the identification of the most likely trade-offs.
How does it help the clients? The Negotiation Planning Tool helps clients develop a clear play book for negotiation where key issues and risk are identified up ahead.
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