Price is Not the Same as Cost

When a company is looking for consultant proposal support, it faces the question: How much is this going to cost? Typically, therefore, when the company makes contact with a proposal consultant, the first question often is: What’s your hourly price?

That’s a fair question, of course, but it’s only part of the answer to the first question (How much is this going to cost?). To calculate the cost, it’s necessary to multiply the hourly price by the estimated (or actual) number of hours involved: C = P x H.

Why is this important? Well, some consultants whose price appears to be lower may actually generate a higher cost because–by virtue of inexperience, inefficiency, or other reasons–they will spend more hours to accomplish the same amount of work.

For example: a typical U.S. Government acquisition allows for 30 calendar days between RFP release and proposal submission. A less-experienced or efficient consultant may need to spend 300 hours over that 30-day period to complete the proposal. If this consultant’s price is $120/hour, the total cost to the client will be $36,000. A more experienced, efficient consultant may spend only 200 hours over the same period to complete the proposal. So, even if this consultant’s price is $150/hour (25% higher), this more experienced consultant will generate a total cost to the client of only $30,000 (20% lower).

When you consider that the more experienced consultant is also likely to produce a better quality proposal, there’s obviously a good reason to hire the second consultant rather than the first one.

All of this is just by way of reminder that price is only one part of the cost equation. So remember to “do the math” before you choose a consultant. You’ll be glad you did.

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