Sales Proposals

Does your sales process require a formal proposal? If so, you know the importance of a well written proposal. It is an unfortunate, but common practice for a decision maker to judge companies who are competing for a sale solely on the quality of their proposal. When this is the case, cost usually plays the largest role in the decision making process. Do I mean that the lowest price always wins? No I do not. In fact, this is a kind of trick question or trick point. Incase you did not notice, I wrote that “cost” (not price) usually plays the largest role.

I know your thinking come on now, what’s the difference? There is a big difference. The price is really simple. That is the monetary amount you pay for a product or service. It is what it is, it’s the price. The cost however is much more complicated. I will use an example from my industry to make the point. If a client wants a proposal for the design of a new website and I propose a price of $10,000, while a competitor proposes a price of $5,000, I would undeniably be higher in price. However, what if my proposal was for a 20 page website and my competitor’s was only for a 5 page site? What is the cost? My site would be $10,000 divided by 20 pages. That comes to $500 per page, while my competitor’s offer is for $5,000 divided by 5 pages, which comes to $1,000 per page. In this example my site is half the price per page, while still being four times the total price. My proposal would not win on lowest price, but it sure would win on actual cost.

The best example and explanation that I have ever heard related to a cost/price comparison comes from one of my favorite authors on the subject of selling, the one and only Zig Ziglar. Zig provides an entertaining and memorable example of this comaprison while comparing the selling price and actual cost of a Schwinn bicycle to a “cheap” bicycle, in his best selling book, The Secrets of Closing the Sale (1984 Berkley Publishing Group).

What does this all mean to you?
It means that you better explain what is included in your proposal and justify your price to the point where your proposal proves that your overall cost is the most effective solution for all of the obvious value you will be providing.

Let’s face it, if we all bought on price, we would all be wearing PayLess shoes and driving Kia automobiles. It is cost that really matters and cost can only be calculated by the person making the decision.

Be aware Some factors that may increase a price may or may not matter to your prospect. You need to figure out what factors matter and know where the value lies within your proposal. You must make sure that the value is clear to your prospect, who you may sometimes never even meet.