BS terms primes use to lower your billable rate

At some point in your 1099 career, you will probably get the opportunity to be part of a proposal for a contract. The (aspiring) prime will want to include your resume in the submission because they feel it will help them win.

I don't place much stock in these to get to your first 1099 gig, but if the contract you're on will be re-competed then it makes sense to team with a good partner.

As part of the bidding process, the primes will ask you to submit your pricing, meaning your billable rate, for your labor category.

You should submit something high that you will be happy with.

Inevitably, the prime is going to try to negotiate you down. Lots of primes want to price their services lower to increase their odds of winning.

This may or may not be a good strategy for the prime, but you definitely shouldn't lower your rate to one that you would be unhappy with.

I've had experience with a couple of these bids, and there are a few hilarious Dilbert-eque terms primes will use to to try to get their partners to lower their rates.

The first term I head was "price to win," used in the sentence "Please submit your price sheets and keep in mind we are pursuing a price to win strategy."

Uhhhh ..... okay ... should you price at zero then? You'll definitely win then.

It would be half insulting if it weren't so hilarious.

The other term or saying I heard was to "sharpen your pencil," implying you should cross out your high rates and pencil in a lower one.

No thanks. I used permanent marker.

I'm having a little fun here, but on a more serious note, don't submit a rate that would make you resent the work. The prime may be able to recruit people at lower wages and therefore be able to charge lower rates, but since you work for yourself, if you pursue that strategy you're just giving yourself a pay cut.

Subscribe to receive Chapter 5: How to model and compare your 1099 income to your W2 compensation.

    We won't send you spam. Unsubscribe at any time.

    Leave a comment

    Please note, comments must be approved before they are published