How much does it really cost to respond to an RFP?

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successRecently, a member of the Society for Marketing Professional Services (SMPS) posted this question on the Certified Professional Services Marketer (CPSM)  listserve: “How much does it cost, on average, to prepare a proposal” in response to an RFP? This has spurred several responses, generally in the direction of these points:

  • The actual RFP response process — that is, the physical drafting of the documentation in response to the proposal call — is only a small part of the overall real cost of assessing and responding to proposal inquiries. Most of this cost is labour, of course (though some proposal responses require significant amounts of printing and physical preparation.)
  • The adage “less is more” applies here — because successful proposals go beyond boilerplate — they capture genuine and deep understanding of the prospective client’s interests, and tell the proponent’s story with true interest and sensitivity. This quality is generally easiest (in time and effort) to achieve when you already have a great relationship with the client and you are bidding for future work. It is harder to do for new clients, but the effort is most likely to be essential if you are to stand out sufficiently from the crowd to even have a chance at the job.
  • Proposal writers/drafting consultants suggest that, with the many variables involved, it is dangerous to set an average number, but the suggestion of $3,000 to $10,000 for a “normal” project isn’t unreasonable. Of course, if you are responding to a multi-billion dollar massive undertaking, you can expect the costs to be much higher — and a simple tender call/response for a basic job, might require only a few minutes of time.
  • Even though the range of costs for proposal development are truly diverse, it is wise to measure this information, perhaps by coding the time required for principals, consultants and supporting marketing staff to prepare the proposal paperwork. As you gather information, you’ll be able to determine your own benchmarks, and — tracking the success of the proposals — you’ll achieve insights to make better go/no go decisions.

Knowledgable, thoughtful proposal strategies are vital for professional practices and contractors involved in more complex design/build initiatives. Watch the numbers game. If your hit rate is low, cutting proposal costs and grinding out even more volume is probably the wrong way to go.

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