As we said at the very beginning PLEASE don’t think about the benefit of pursuing an RFP solely in financial terms. For big companies that have deep libraries of content, veteran proposal managers, and wide networks of partners cash is king, but if you are a new entrant the value you will get from building each of those is huge even if you don’t win.
So lets figure out the value of going after an RFP
Financial benefit: To compute the financial value of winning we are going to use some VERY back of the envelope math
From service sales under this contract:
1) Multiply the number of people you think you might staff
2) Multiply that by the average salary you’ll be paying them
3) Multiply that by 25% (a typical profit margin for a services contract plus the value of being able to defray your fixed back office costs over a larger revenue base)
4) This is a rought estimate of the financial value of this RFP from services
From product sales under this contract:
1) Multiply the number of units you think you will sell
2) Multiply that by the average price for them
3) Multiply that by your profit margin
4) This is a rought estimate of the financial value of this RFP from products
Past performance: Winning work will help you win more work broadly. So look at the total financial value that you computed for this contract and double it to account for the increased chance of winning future work.
And this is the value of winning.
The value of an improved proposal library and relationships and all that other stuff you stressed: You may notice that we haven’t taken into account the value of the proposal content that we built/improved or the relationships with agency buyers and teammates and we’ve been stressing how important that is for the past few classes. While those things are super valuable we didn’t include the costs to write the content or build the relationship in the cost side of our analysis so we shouldn’t add it to the benefit side either