1. Florida Procurement Technical Assistance Center
Helping Businesses Grow & Succeed
at Florida Gulf Coast University
Presents:
Pricing Your Product or Service
Why you and not them? Why them and not you? This session focuses on a modernized marketing tactics for developing a compelling offering with a competitive advantage. Amanda Stirn, FSBDC Consultant and Marketing Director will present exploring the creation of instant clarity headlines and tips on breaking down competitive and unfair advantages, to strengthen your marketing approach.
Government Contracting Services are offered by the Florida Procurement Technical Assistance Center at Florida Gulf Coast University

2. Learn more online at www.FPTAC.org
Government Contracting Services are offered by the Florida Procurement Technical Assistance Center at Florida Gulf Coast University (FGCU)
This Procurement Technical Assistance Center (PTAC) is funded in part through a cooperative
agreement with the Defense Logistics Agency.

3. Objectives
Cost
Cost Realism
Price
Price Analysis
Profit

4. References FAR 14 Sealed Bidding FAR 15 Contracting By Negotiations
FAR 16 Type of Contracts
FAR 30 Cost Accounting Standards Administration
FAR 31 Cost Principles and Procedures
FAR Appendix B Cost Accounting Rules

5. Methods of Procurement
Sealed Bids (Price only)
Invitation For Bid (IFB)
Negotiated (Price or Cost)
Request For Quote (RFQ) (Price only)
Request For Proposal (RFP)
(Price or Cost Data)

6. What is Cost? Cost is the expense the contractor
will incur in performing the work

7. Cost Criteria: Reasonable, Allowable and Allocable
Variable, Fixed, and Semi-Variable
Direct and Indirect

8. COST CONTRACTS Cost-Plus-Fixed Fee Cost-Plus-Award Fee
Cost-Plus-Incentive Fee
Cost-Sharing

9. Three Basic Cs For Cost Type Contracts
Know your Costs
Know your Customer
Know your Competition

10. What will the Government Pay?
The Government will reimburse the contractor to do the work as long as the costs are allowable, reasonable, and properly allocable to the contract

11. What are the Cost Elements? (Your Company)
Direct Labor
Overhead
Material
Subcontractors
General and Administrative
Travel
Profit

12. 1) Overhead may include:
Cost of Doing Business!!!!!
Taxes
Federal Taxes
Social Security (FICA)
Employer Portion
Medicare Taxes
Property Taxes
Licenses
State Licenses
County Business Licenses

13. 2) Overhead Continued: Fringe Benefits: Employee Health Insurance
Annual Leave
Sick Leave
Family Leave
Retirement

14. 3) Overhead Continued: Office Space Furniture Electricity
Air Conditioning
Heat
Equipment
Copier
Computers
Phone

15. 4) Overhead Continued: Utilities: Sewage Waste Water Treatment
Trash Removal
Recycle Program

16. 5) Overhead Continued: Insurance Building, Car, Truck
Worker’s Compensation
Contract Requirements
Credit Cards
Bldg. Maintenance
Lawn Service
Depreciation
Interest on Loans

17. What are the Cost Elements? (State)
Salaries
Fringe Benefits
Travel
Other Direct Costs
In-House Charges
Indirect Cost
Profit

18. Build a Cheeseburger?

19. Base Line for the Cheeseburger
One make every 30 seconds, start to finish
Includes:
Direct Labor
Overhead
Material
Profit

20. Direct Labor ½ minute labor $00.20 1 minute labor $00.40
Counter Clerk $8.05
Cashier $8.05
Cook $8.05
Total $24.15

21. Overhead
100%

22. Materials Build a cheeseburger starting at the bottom Bun Bottom
Mayonnaise
Mustard
Patty
Cheese
Pickle
Lettuce
Tomato
Ketchup
Sesame Seed Bun Top

23. Material Costs Bun Bottom $00.1251 Mayonnaise $00.0005
Mustard $
Patty $
Cheese $
Pickle $
Lettuce $
Tomato $
Ketchup $
Sesame Seed Bun Top $
Total $

24. Material Costs Wrapping Paper $00.015 Bag $00.015 Napkins $00.015
Salt/Pepper $00.015
Total $00.006

25. Cost Elements for the Cheeseburger?
Direct Labor $00.20
Overhead 100% $00.20
Material $00.71
Subtotal $01.11
Profit 10% $00.11
Total Cost $01.22

26. What is Total Cost?
Cost Elements + Profit = Total Cost

27. Cost Realism
Cost and Technical proposals must be realistic for the work to be performed
Reflect a clear understanding of the requirement
Cost must be consistent with the various elements of the technical proposal

28. Profit
Represents the payment the contractor may receive for performance over and above the cost incurred for doing the work
Contractor/Government Risk

29. Profit Statutory Limits
Cost Plus Fixed Fee 10%
Research and Development Cost Plus Fixed Fee 15%
Architect and Engineering Services 6%

30. What is Price?
Cost Elements + Profit = Price

31. What is the Price for your Service?

32. Price Direct Labor $10.00 (Unloaded Rate) Overhead $15.00 Est. 150%
Material $03.20
Subtotal $28.00
Profit $02.80
Total Price $31.00 (Loaded Rate)

33. Profit Factors for FFP Contracts
Market Competition
Contractor Risk 100%

34. Are you Making a Profit?
Sales-Direct Cost-Indirect Cost= Net Profit

35. Price Analysis
Process of examining and evaluating a proposed price without regard to evaluating the separate cost elements and proposed profit.

36. Firm Fixed Price Contracts
Firm-Fixed Price with Economic Adjustments
Indefinite Delivery Contracts
Time and Material
Labor Hour
Letter Contract

37. Price must be Fair and Reasonable
Based on:
Adequate Price Competition
Previous Prices
Yardstick
Published Prices or
Independent Government Estimate

38. TIPS 2080 Hours = Government Year Loaded-Unloaded Rates
Separate Technical and Cost Proposals
DCMA-
Direct Labor Rates
Overhead
G&A (For a Specific Company)
Best Value Awards
Technical
Past Performance
Price

39. Summary
Cost
Cost Realism
Price
Price Analysis
Profit

40. Q & A www.fsbdcswfl.org www.fptac.org Point of Contact
Daniel Telep Jr.