Costs and pricing
Part of How to model a proposal software budget in the UK
Nine steps to measure proposal software return on investment
How to calculate proposal software return on investment in England in nine steps, from time savings and win rates to payback, with every figure labelled.
What to take away
- Most teams start with the licence fee and stop there. The mistake is ignoring the labour cost of the documents the software replaces.
- Build the case on four numbershours saved per proposal, hourly cost, win-rate movement and the annual subscription.
- Use a baseline quarter before you switch anything on, or you will have nothing honest to compare against.
- Payback is a ratio, not a promise. Label every figure as an estimate until you have your own data.
- Recheck the numbers each quarter, because seat counts and usage both drift.
Why the licence fee is the wrong starting point
A subscription is the smallest part of the calculation. The larger sum is usually the sales and bid time spent assembling documents, chasing approvals and rebuilding pricing tables.
Start from the work, not the invoice. Your finance team can supply a fully loaded hourly cost for the people who write proposals. For example, a bid manager on a loaded cost of £45 an hour is a labelled illustrative figure, not a market rate.
If you are still assembling the cost side, the costs and budget guide for England sets out the line items to include before you build the return model.
Nine steps to build the calculation
Nine steps to ROI
- Pick a baseline quarter
- Count the hours
- Apply a loaded hourly cost
- Estimate hours saved
- Value the time saved
- Adjust for win-rate movement
- Add the full software cost
- Calculate net benefit and payback
- Pick a baseline quarter. Choose a period of at least eight weeks before any rollout, and record proposal volume, average hours per proposal and win rate.
- Count the hours. Ask each writer to log time on drafting, formatting, internal review and pricing approval for every document.
- Apply a loaded hourly cost. Multiply hours by salary plus employer costs, divided by working hours.
- Estimate hours saved. Be conservative. A 20 per cent reduction in drafting time is a labelled illustrative assumption you can defend.
- Value the time saved. Hours saved multiplied by the loaded hourly cost gives the gross labour benefit.
- Adjust for win-rate movement. Only count this if your baseline sample is large enough to mean anything. Ten proposals will not tell you.
- Add the full software cost. Include seats, onboarding, template build and any integration work, not just the headline subscription.
- Calculate net benefit and payback. Net benefit is gross benefit minus total cost. Payback is total cost divided by monthly net benefit.
- Review quarterly. Replace assumptions with actuals as your own data accumulates.
Worked estimate with labelled figures
Take a team of six people producing 40 proposals a quarter, each taking nine hours. At a loaded £45 an hour, that is £16,200 of proposal labour per quarter. These are illustrative figures, not benchmarks.
Assume the software cuts three hours per proposal. That saves 120 hours, or £5,400 a quarter. If the subscription and setup cost £2,400 a quarter, net benefit is £3,000 a quarter.
Payback arrives inside the first quarter on those assumptions. Change the assumption to one hour saved and the net benefit falls to £300, which is a much weaker case. The sensitivity matters more than the headline number.
Where the assumptions usually break
Time savings are often overstated because formatting was never the bottleneck. Review and approval cycles usually are.
Win-rate gains get counted twice, once as extra revenue and once as saved bid cost. Pick one.
Seat creep is the quiet one. Teams buy ten seats, then a reorganisation pushes it to fifteen. The pricing models comparison explains why per-seat structures behave differently from flat or usage-based ones.
Finally, check how your business population assumptions compare with official data. The ONS business population and structure data is a reasonable starting point for segment sizes, and the older business population estimates for 2019 helps with long-term trend work.
Common questions
What counts as a realistic payback period?
There is no universal answer. Most teams target payback within two to four quarters, but the figure depends entirely on proposal volume and the loaded cost of the people writing them. Label your own assumption and test it.
Should I include win-rate improvements in the calculation?
Only if you have a baseline large enough to be meaningful and a way to separate the software from pricing, product or market changes. Otherwise leave it out and treat it as upside.
How do I handle claims about results in marketing material?
Keep your internal model separate from any vendor claim. The ASA sanctions guidance explains what happens when advertising claims cannot be substantiated.
