What Margin to Bid, and Why a High Strike Rate Is a Symptom

How to read this sheet

The curve is the whole tool and it has to come from your own register rather than from a feel for the market. Group a year of quotations by the margin they went out at and count what came back; four or five points are plenty, and the exercise of building it is worth as much as the answer, because most factories discover the curve is flatter near the top than they believed. A flat curve means a higher bid costs very few orders, which is exactly the condition under which quoting dearer is nearly free. Treat the strike rate as a diagnosis. There is a win rate that belongs to the best bid, and it is well under half on most books. A factory winning most of what it quotes for is not good at quoting, it is cheap, and the register will show the margin drifting down year on year as the sales team learns which price gets a yes. That drift is invisible in a monthly profit figure and obvious here. Capacity raises the bid and this is the part worth arguing about internally. Work won beyond what the plant can make does not vanish; it goes outside, and whatever a subcontractor leaves on it is the true value of that marginal order. Enter that margin honestly - if placing work outside genuinely costs you money once quality and follow-up are counted, enter a negative figure and watch the optimum move further up. What is not modelled. Every enquiry is treated as won or lost at the same margin, when in practice a book is bid selectively - the right refinement is to run this sheet once per class of customer rather than once for everything. Win probability is independent between enquiries here, which understates the variance considerably: a factory can bid its optimum and win nothing all quarter. Nothing prices the relationship value of a buyer kept warm with a thin order, which is real and is the honest argument against this arithmetic. And the curve is historical, so it describes a market that has already happened; in a falling market it will be optimistic at every point.