Know Your Niche

Every so often one comes to me asking if I’d be interested in helping them respond to an RFP from some large government agency or business that they’ve managed to get on the vendor list for. These days I usually decline . . .

At first we all used to jump at the chance. When we looked at the functional requirements we realized that we’d built projects of that scope for under $25,000 and we KNEW the budget was at least ten times that for the project. It sounded like an easy win.

But there is very little for free in business (except maybe for some excellect ColdFusion software :->). Firstly, most website contracts are awarded on a Goldilocks basis, so bidding at $25,000 is unlikely to win you a $250,000 job – even if you were capable of doing the work profitably and professionally for that price. Given that, you’re going to have to compete on quality of presentation and references with companies that are used to sending four person teams to pitch projects and develop custom powerpoints to close each project over maybe a six month 6-10 meeting sales cycle. If you’re used to sending one person to two quick meetings and churning out a 20 page boilerplate proposal in a couple of hours, you probably don’t have the skills or the experiences to close the deal.

And even if you did get the project, the kind of overhead in terms of status reports, project management documentation and meetings are such that it would be incredibly disruptive for a smaller shop used to doing lots of little projects.

There is absolutely nothing wrong with continually broadening your range of price points by (perhaps) simplifying your low end solutions to offer a lower entry point and providing more additional services and solutions to grow the high end of your business incrementally, but in my experience, trying to do a project more than 50% more expensive than your biggest (or more than 50% cheaper than your smallest) is unlikely to work.

Any thoughts/experiences?!