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BID TIP 8 |
THE X - Y TRADE OFF |
The rate at which a respondent’s solution cost (X) rises relative to the functionality (Y) of their solution is referred to as the X-Y trade-off ratio.
Prior to releasing an RFP/RFT most customers will decide on an X-Y trade-off ratio. This ratio is intended to provide them with a mechanism to objectively assess solutions that are more expensive than the average solution cost.
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Because customers choose the ratio’s it varies so greatly it is impossible to provide an accurate average ratio. However, it is fair to say that the ratio between X and Y increases exponentially for higher values of X. For example the ratio may start out as a 5% higher price requiring 10% more functionality and end with 100% higher price requiring 1000% greater functionality. |
When is the Best Time to Ask about the X-Y Ratio?
You should attempt to ascertain a client view of the X:Y trade-off ratio before an RFP/RFT is released. Asking about the ratio at a pre-solicitation briefing or in a formal written question can send the wrong message.
