I had an invitation to bid on a government contract that needed local diversity certifications that would cost a bunch of money just to apply. They also had a scale down provision to basically nothing so even if we won there is no guarantee that the contract would cover the cost of certifications. We have list pricing so they wanted us to jump through these hoops and still give them the standard rate. We passed, but if this is our future we’ll have to stop doing list pricing and start charging 5x to 10x extra to cover the hassle of dealing with them.
Now you know why government contracts are so expensive. They have to be, to cover the costs of dealing with the government.
It's not wrong to over-quote a shitty customer by an amount that'd make you willing to deal with their shittiness. That's totally fine on your part actually, since either they take the bid and you make money, or they don't and you don't have to deal with them.
We do list pricing to cut down on marketing costs. Many tenders disallow increasing the price of deliverables over list pricing (it’s an automatic disqualification). You can’t throw in extra stuff either as they reserve the right to remove specific line items after awarding the tender. They write the rules to benefit themselves.
The only way I can increase prices is if I stop having an advertised price and go to a pure ‘contact us for pricing’ model. I can either be mass market at commodity prices or I can target governments at inflated costs but I can’t do both. We’re the last hold out in my niche and eventually we will have to leave the commodity market.
My understanding was that the government doesn't want list service, but wants to negotiate something very specific and annoying, like some weird compliance or support requirements. Of course the government can pay list price if they only want list service, but they don't. List service means you ship the product to the customer and then it's the customer's problem after that.
What you are saying does not make sense to me, if that were true then why have a provision requiring that any excess on list pricing would be disqualified. Also there was little scope for negotiation, basically if you meet a bar on functionality then the only consideration is price. Any ‘negotiation’ has to go through an app that loops in everyone who has applied and is really limited to clarifications of facts. This is one of many government orgs and tenders I’ve dealt with, and the first one I elected not to proceed with.
The typical strategy is to not ask for clarification and use deficiencies in the spec to justify change requests that gouge them. You need a cadre of lawyers to be able to play that game though.
Also there are a million of different governments and all different levels, I’m giving one anecdote as it applies to one of them. I’m sure many others have a different experience.
You could potentially do so with some extra games around 'different' products and/or business entities, but whether it's worth the trouble is another question (there are certainly companies that make a good margin just reselling products to the government).
If I could have I would have, I’m not the only person in this position nor is it their first tender, they progressively go and close the loopholes. If it’s on the market for a price they want this price regardless of the overhead they add to the process.
