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New International Technology Co.
2020-06-21 15:09:39

RFQ WITH COST + MARKUP

We received an RFQ from a potential Client for the provision of technical services on a medium-term basis ; the Client is asking a proposal indicating all the major costs elements for us and our markup, to sum up a total unit rate (different items are involved, similar structure). They are a major international industrial Group, we know their commercial approach will not be collaborative. We are not comfortable in providing our costs structure and markup, so ultimately our margin. I am looking for a way for a soft refusal, but we want to quote. Did you have a similar experience? Any advice? Thanks!
 
 •  Tata Consultancy Services (TCS)  •   2020-06-23 06:12:02
I've seen this type of requests many times even for large and strategic deals. This type of ask is primarily seen in Govt sponsored deals. One of the reason for such ask is to restrict Supplier's mark-up and for transparency, gain share etc. I think you should first ask Customer why they would like to see Supplier's internal costs. Are they going to compensate the Supplier if Supplier can't achieve the estimated margin?

If they are looking for transparency, you can submit the break-up of your Charges (Y-o-Y/M-o-M, FTE cost, Non FTE cost, break up of Non FTE costs etc.) and also the Y-o-Y resource loading (FTE) if that helps. For submission, you can fill in the relevant portions of the Price Form where Charge needs to be mentioned leaving cost details blank and add assumption that you would like to initiate the discussion on cost details in the next phase. Hope they will not disqualify you for not providing the cost details. I believe if your price is competitive and solution helps Customer achieve their business goals then definitely Customer will shortlist you for the next round unless its a Govt sponsored deal and it is one of the qualifying criteria to submit the cost details.
 
 
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