Pricing is where most federal proposals are won or lost. Too high and you're not competitive. Too low and the contracting officer questions whether you can actually perform. The sweet spot is narrow, and finding it requires real data — not guesses.
1. Know What Type of Pricing the RFP Wants
- Firm-Fixed-Price (FFP) — You quote one price, agency pays it. Risk is on you. Plan for ~15% margin to absorb scope creep.
- Time and Materials (T&M) — Hourly labor categories times hours. Lower risk for you, but agencies negotiate hard on rates.
- Cost-Plus-Fixed-Fee (CPFF) — You bill cost + a fixed fee. Typically used for R&D. Requires DCAA-compliant accounting.
- IDIQ task orders — Pricing is set per task order; the master IDIQ just establishes ceiling rates.
2. Benchmark Against GSA Schedule Rates
GSA Schedule rates are public. Use them as a ceiling — federal agencies expect to pay no more than the equivalent GSA rate. GovSeeker's labor rate intelligence aggregates over 80,000 published GSA rates by labor category, schedule, and vendor — so you can see exactly what others are charging for the same work.
3. Build From the Bottom Up — Then Sanity Check
Start with hours × loaded labor rate per category. Add overhead, G&A, and fee. Then compare your total to the agency's likely budget (often hinted at in the RFP) and to historical award amounts in FPDS for similar work.
If your bottom-up number is 20% above historical awards, you're going to lose on price. Either re-scope, find efficiencies, or skip the bid.
4. Understand Wrap Rates
Your wrap rate is the multiplier you apply to base salary to cover fringe, overhead, G&A, and fee. Typical wrap rates:
- Small consulting firms: 1.8x-2.2x base
- Mid-size services firms: 2.0x-2.5x base
- Large primes: 2.5x-3.2x base
If your wrap rate is significantly higher than competitors, you'll never win on price. Drive overhead down or pick contracts where total value matters more than rate.
5. Don't Forget Indirect Rates
For cost-reimbursable contracts, your indirect rates (overhead, G&A, fringe) get audited by DCAA. Get a provisional rate agreement before bidding cost-type work — winning without one creates massive billing problems later.
6. Build a Price-to-Win Model
For competitive bids, build a Price-to-Win (PTW) model: estimate competitor costs, account for likely fee, and target your price slightly under the predicted competitive midpoint. PTW analysis is part art, part data — and the data part starts with FPDS history of similar awards.
7. Don't Race to the Bottom
The lowest price loses contracts too — agencies see suspiciously low bids as performance risk. If your price is more than 25% below the average competing bid, expect a "realism" challenge or even disqualification.
Sign up for GovSeeker and benchmark your pricing against actual federal labor rates and historical awards in seconds.