Pricing terms,
precisely defined.

The uncontrolled expansion of project deliverables beyond the originally agreed scope, typically without corresponding adjustments to budget or timeline.

A pricing methodology that uses Bayesian inference to estimate win probability and optimal price points based on prior data and ongoing negotiation signals.

The counterintuitive finding that increasing win rates often correlates with decreasing profitability, because high win rates typically indicate underpricing.

A pricing model where the price is set primarily on the perceived value to the client rather than on the cost of delivering the service or on competitor rates.

A computational technique that uses repeated random sampling to model the probability of different outcomes in uncertain processes, applied to pricing to forecast margin distributions.

The structured framework of pricing models, tiers, discounts, and risk premiums that a firm uses to set prices consistently across different services, clients, and deal sizes.

The gradual, often invisible erosion of project profitability caused by underpricing, scope creep, uncontrolled discounts, and inefficient delivery — typically amounting to 15-25% of annual margin.

A formal, priced amendment to a project's scope, timeline, or budget that converts out-of-scope work into billed revenue instead of absorbed cost.

A recurring pricing model where the client pays a fixed monthly fee for a defined scope of services, providing predictable revenue for the agency and budget certainty for the client.

The fundamental choice between pricing projects at a fixed price (client bears no overrun risk but agency absorbs scope risk) versus billing actual hours (client bears overrun risk but agency has no margin upside from efficiency).

A structured scoring system that evaluates potential projects or clients based on strategic fit, margin potential, scope certainty, and win probability — before time is invested in proposal creation.

A pricing structure that offers clients a choice between Good, Better, and Best service levels, each with increasing scope and price, designed to capture varying willingness to pay.

The additional margin built into a fixed-price quote to compensate the agency for the probability of scope overrun, uncertainty, and unforeseen complications.

The statistical likelihood that a given proposal will result in a won deal, estimated using historical data, deal characteristics, and competitive context.

A cognitive bias in pricing where the first price a client sees (the anchor) disproportionately influences their perception of subsequent prices, making them seem more reasonable by comparison.

A pricing model where the price is calculated by adding a fixed margin percentage to the estimated cost of delivering the service, common but structurally incentivizes inefficiency.

The structural limitation where billing by the hour caps a firm's revenue at the number of billable hours available, creating an implicit ceiling on income regardless of value delivered.

The strategic practice of structuring proposals to highlight distinct value, risk transfer, and capability advantages compared to competitors, enabling price premiums and higher win rates.

A statistical method that updates the probability estimate for an outcome as new evidence or data becomes available, used in pricing to refine win probability and risk estimates with every new deal.

A pre-agreed percentage of additional capacity (typically 15-20%) built into a fixed-price project to absorb minor scope variations without triggering a formal change order.