50+ SAMPLE Price Proposal

What Is a Price Proposal?

A price proposal is a document that indicates the preliminary bid of a contractor for a project, plan, or program for a client. The document identifies a price that a contractor charges a customer after the calculation of possible costs through a cost analysis that they will incur after the completion of the project. Remember that a price proposal is not a price estimation. A price proposal is a comprehensive document that contains accurate price quotes for the raw materials, labor costs, tax additions, and other general overhead costs. The price proposal also indicates the markup proposal from the contractor that they pass to clients similar to possible competitors vying for a similar project. The document must be thorough and complete, covering all probable expenses that emerge during the implementation of the project leading to its completion. There must be a proportion between customer satisfaction and value and the financial feasibility of the contractor. A contractor writing the price proposal can showcase that each price in the proposal is valuable and relevant to the needs of the client.

According to the statistical data from IBISWorld under the industry statistics of the United States focusing on the construction industry in the US regarding the number of businesses from 2003 to 2027, there are over 3.7 million construction businesses in the United States in 2022, with a growth increase of 3.3 percent from 2021.

Different Pricing Strategies for a Price Proposal

Pricing strategies rely on how a contractor presents the prices to a client. In writing a price proposal, it matters. The purpose of writing the price proposal is to win over a client and persuade them to hire the company or the contract for the future project. Pricing is a challenging task, and it requires a lot of market research. Applying various pricing strategies can help a contractor to find a suitable pricing method for clients. Below are examples of pricing strategies and their descriptions.

Competition-based pricing: This strategy is also known as competitive pricing or competitor-based pricing. Its main focus is on the existing market prices for products or services without the consideration of product costs or consumer demand. In this pricing strategy, the prices of competitors serve as the benchmark of prices. The strategy is highly effective in saturated industries since the slight price differences can be the deciding factor for possible clients. In competition-based pricing, contractors can price their products slightly lower than competitors. Pricing products and services in a competitive setting in the market will put the brand in a better position and recognition from consumers. Competitive pricing keeps a business on top of its competitors and keeps the prices dynamic. Cost-plus pricing: The cost-plus pricing strategy focuses on the products and services that the company offers or the cost of goods sold (COGS). Another term for cost-plus pricing is markup pricing since most organizations add prices to their products according to how much they want to profit. Cost-plus pricing is advantageous to companies that sell physical products. Cost-plus pricing is the ideal strategy to use when the competition uses similar pricing models. Before executing this pricing approach, conduct a pricing analysis that consists of the closest competitors in the market to meet company goals. Using this pricing strategy also covers operating and production costs.Dynamic pricing: Other terms to refer to dynamic pricing include surge pricing, demand pricing, or time-based pricing. This strategy is a flexible pricing approach where the prices fluctuate according to market and customer demands. Industries that use this pricing strategy include airlines, utility companies, hotels, and event venues. They apply different algorithms that look at competitor pricing, demands, and other factors that help them match when and what a customer is willing to pay at an exact moment. In dynamic pricing, marketing teams can prepare for promotions and events, including launches at the perfect time.High to low pricing: In a high to low pricing strategy, a company offers a particular service or product by initially selling it at a high price but lowers its price when the product drops in terms of novelty and relevance. Examples of this pricing approach include discounts, clearance sales, and year-end sales, which is why the strategy is also called a discount pricing strategy. The pricing approach is also common in retailing business that sells seasonal items or products, including furniture, clothing, and decors. Consumers anticipate the end-of-season sales and discounts, which is why Black Friday and other sales are popular.Hourly pricing: Hourly pricing, otherwise known as rate-based pricing, are common with consultants, contractors, freelancers, and other laboring professionals that provide business services. The hourly pricing strategy is time for money. Some clients are wary of utilizing this pricing strategy as it focuses more on labor rather than performance efficiency. If you are operating a business that provides quick and high-volume services, this strategy is what customers want. The organization has a price breakdown in hourly divisions, and customers decide according to a lower price point that fits their financial budget.Skimming pricing: In a skimming pricing strategy, companies charge the highest prices for a new product or service then lowers in price over a period when the product becomes less popular in the market. Skimming is different from high to low as the prices in the skimming strategy lessen over time. This type of pricing strategy is prevalent in new technologies, including video game consoles, smartphones, laptops, and personal computers. The approach also helps a company to recover sunk costs. This strategy brings a disadvantage to individuals who made purchases on initial releases. At the same time, competitors recognize the price margin as prices start lowering. The skimming pricing strategy is advantageous to companies that sell products with varying life cycles. The goods that can stay in the market for longer can stay on a higher price range and maintain the marketing plans the organization pursued.Project-based pricing: Project-based pricing strategy is the opposite of the hourly pricing strategy. Instead, a contractor charges for a flat rate to accomplish a project instead of clients paying for time. Project-based pricing is prevalent in sectors providing services, including consultants, freelancers, and contractors. This pricing strategy relies on price estimates according to the project deliverables. Individuals that turn to this approach write a flat rate for the project. Despite the prices being steep on the part of the client, a one-time investment is not a bad idea.Value-based pricing: Organizations that utilize the value-based pricing strategy price their commodities or services according to the ability of the customer to pay. Despite the capacity of companies to increase their selling price, they set their prices according to customer data and interests. An organization that utilizes the strategy correctly boosts customer satisfaction and loyalty. Value-based pricing relies heavily on customer profiles and buyer personas, keeping prices within these standards. This type of pricing strategy helps to strengthen the market and consumer demand of a company offering its goods and services. Bundle pricing: Companies that offer the bundle pricing strategy offer complementary products and services to the initial purchase of a client, selling the items as a single unit. It is a great strategy that adds value to customers that are willing to pay a couple more for an extra product or two. Businesses that utilize this pricing approach help product promotion and get customers to purchase the product individually. Bundle pricing allows a company to sell more items compared to selling them separately. It is a smart strategy to upsell or cross-sell certain products that become advantageous to customers and business profit.

How To Devise a Price Proposal

Writing and developing a price proposal is challenging since it focuses on monetary values. There are different ways to get a client to sign your pricing proposal. For starters, the content of the proposal must be in line with the expectations of a customer. It must also show accuracy to the project and service requirements and give clients flexible choices. Below are valuable tips when writing a price proposal.

  • 1. Propose a Discovery Session with the Client

    The first time that you present the pricing proposal to a client must not be the first moment of interaction. It is necessary to have a discovery session with them to lessen misunderstandings when you present them with fee tables or the project completion plan. A discovery session is a procedure that a company performs to gather essential information about the client, their business profile, current challenges, and the solutions they want to see. Having this background helps a contractor plan the features of functionality, interfaces, and designs. Once the client agrees to the development plan, there is a more accurate pricing estimate, managing customer expectations. The session also provides the client with a better understanding of the delivery value of the contractor with minimal focus on the price tags associated with the offered materials and services.

  • 2. Involve the Team in the Project Quoting

    Before a contractor finalizes the commitment of deliverables, project timeline, and budget plan, it is best to have a consultation meeting with all the team members handling the project. These individuals are experts at their craft, and their inputs are valuable to guarantee that the proposal follows a SMART goal-setting process. There are instances that the team has contributions or suggestions, whether to simplify or complicate the project, that need an immediate response. The team meeting helps to identify and address these before passing the final proposal.

  • 3. Present a Benefit or a Solution

    The purpose of price proposals is to communicate prices but not the value. To make the proposal more appealing to clients, present benefits and solutions the company seeks to accomplish. The proposal in itself must convey the value, expertise, time, and competency of the team working on the project. In doing so, the document becomes more attractive to the clients instead of a price sheet.

  • 4. Offer Multiple Options or Packages to the Price

    If a contractor writes a single pricing option for a client in the proposal, it puts them in an uncomfortable situation. However, if a contractor offers multiple options to a client through a tiered pricing method, there is a higher probability of working together. Potential customers have more power and flexibility to select the best plan for their project. For the method to work, each package must be on value-based pricing. To be very obvious, clients prefer it if they have different choices. Stick between two to three options for your client. Any more than that can make the client feel overwhelmed.


What is a firm price proposal?

A firm price proposal is also known as a fixed price proposal. The document promises that a contractor or company can complete a project for a set price. It also determines all construction costs. It is also called a construction bid or lump sum proposal.

How do you write a proposal email?

In the proposal email that you send to your prospect clients, make sure to include the buyer persona, a needs analysis, project objectives, project timeline, scope of the proposal, and potential costs. The email itself must be easily comprehensible with a professional tone that answers all customer inquiries. It must also indicate the next steps or an action plan from the target audience.

What does FFP contract mean?

An FFP contract translates to a firm-fixed-price contract. This type of contract supplies a price that is not subject to any adjustments or modifications. The fee on the document stems from the contractor’s experience in conducting similar projects. It also puts all the corresponding responsibility and risk on the contractor for costs that come from loss.

Writing a price proposal for a client can be a daunting task. A contractor can identify client needs and problems and can produce concrete solutions, by having sufficient background and knowledge about the client and their company. From there, the contract can do their research regarding the materials, products, or services that they can offer the client. When creating the price proposal, give multiple options to potential consumers that can allow them to make better choices that suit their needs. Download the price proposal samples available in the article today and start making one for your organization.