Today, there are tools for all tasks. Almost everything can be made more digitally convenient. Those tools just cost money. Of course, there are free tools, but they usually don’t provide handy features. So is investing in a Bid Management Tool a good investment? What is the ROI (Return on Investment) of a Bid Management Tool? And when does it pay to use a tool?
Are Bid Management Tools financially attractive to you? You calculate that in the following way:
Step 1: Cost release Bid without tool
Bid costs= Average Hourly Spending per Bid * Internal Hourly Rate
- Average time commitment: How many hours does your staff spend answering the bid. It is the total number of hours. So at a meeting where three employees are present, you count this time 3x.
- Internal Hourly Rate: What is your employees’ internal hourly rate? Usually, it is between 50 and 85 euros.
Step 2: Savings
Savings= 25% X Bid costs*number of bids
- 25%: From our experience, we know that the minimum savings on a bid are 25%. In some cases, these savings are many degrees higher. But for this calculation, we are considering the minimum savings of 25%.
- Bid cost: See step 1
- Number of bids: average number of RFPs you participate in
Step 3: Cost Bid Tool
Tool costs= (Monthly price of the tool * 12 months) + Annual maintenance cost + (Implementation costs / 3)
- Monthly price of the tool: The user fees x the number of users, taking into account the different licenses within the tool
- Maintenance costs: The cost required to run the tool. With a SaaS solution, these costs are included in the monthly price, but this is not included with a version running locally
- Implementation cost: The cost you incurred to implement the tool. These are often internal and external costs if you use a consultant for implementation. We amortize these costs in 3 years for a good comparison
Number of hours per bid: 250 hours
Internal Hourly Rate: 65 euros
Number of bids per year: 3 bids
Monthly price tool: 3 users x 150 euro = 450 euro
Maintenance cost: none
Implementation costs: 15,000 euros
Savings: 250 hours x 65 hours x 3 bids x 25% = 12,187.50 euros
Cost Bid Tool: 450 euros x 12 + 0 + 15,000 /3 = 10,400.00 euros
In this example, we see that with the three bids, it already lends itself to using a tool. We leave out conversion improvement. A bid management tool also positively impacts the conversion of responses into a deal. That’s because you save time per bid, leaving more time to do a better response and you start reusing good texts. Yet how significant that extra impact varies significantly from company to company. It’s somewhere between 10 and 50%.