To derive the entirity of the contract bid - shouldnt we add COGS and 15% discount to the bid value itself so that those costs are covered?
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Im not certain why cost is deducted from revenue for the entirety of the contract bid.
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Ian
on Feb 18, 2021
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#1 BCG coach | MBB | Tier 2 | Digital, Tech, Platinion | 100% personal success rate (8/8) | 95% candidate success rate
Hi Ukasha,
If I understand your question correctly, the answer is embedded in the case here:
- Typically, the client calculates profitability by deducting COGS & Overhead from the retail price.
- In such a scenario of bidding, the supplier needs to find out how much profit he can forfeit in order for the deal to remain attractive.
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Clara
on Feb 18, 2021
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McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut
Hello!
It´s stated in the case, here > "Typically, the client calculates profitability by deducting COGS & Overhead from the retail price"
Cheers,
Clara
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