We lost by bidding under budget.
In short: You can’t compete with someone willing to lose money to win. Learn from the loss, but don’t make it your pricing strategy.
A client was told the budget. They came in under it... and they lost anyway.
Not by a little. The winning bids were less than half of theirs.
When they told me, I could hear the conclusion forming: “We’re too expensive. We need to drop our prices across the board.”
I get it. Losing a big deal that you thought was in the bag seriously sucks, and the easiest lesson to draw is the most painful one.
But I’ve been on the other side of this. Years ago, I lost a project I really wanted. We came in right at budget and got turned down flat. Months later I ran into the agency that won it at a conference. They told me, a little sheepishly, that they’d lost a ton of money on it. They just wanted the case study that badly.
You can’t compete with someone who’s willing to lose money to win. And you shouldn’t rebuild your pricing around them.
A few things are always true:
- Enterprise budgets get spent. If the money’s approved, someone is getting it. Pricing yourself into the floor doesn’t make the budget smaller. It just makes your share smaller.
- One weird outcome is one data point. Learn from it, but don’t let it become your strategy.
- Ask yourself: if they’d come back and offered you the work at half your price, would you have wanted it?
Usually the answer is no, which tells you the price wasn’t the problem.
Lost deals teach you plenty. Just make sure you’re learning the right lesson.
PS. That agency who beat us out? They went out of business a couple years later.