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M A Purdy On-Line - The X-Y Trade Off

BID TIP 8

THE X - Y TRADE OFF

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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.

 

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.