[josefresco]

OR, the smaller competitor will deliver a much smaller and simpler product for less money and build a solid reputation as a high value low cost provider who's not over pricing their software just because they're working for the "government" which is known to have deep pockets and understand little about what they're buying.

[SwellJoe]

"OR, the smaller competitor will deliver a much smaller and simpler product for less money and build a solid reputation as a high value low cost provider who's not over pricing their software"

That's only possible if there has been a paradigm shift that the original poster has not identified. He's stated a few times that his company is operating on thin margins. I'm gonna give him the benefit of the doubt and assume he's running an efficient shop.

I don't believe that leaves room for a "low cost" competitor at the bottom. And, unless it's a commodity, it wouldn't matter anyway. People who do these kinds of acquisitions make a check list...the product that checks off the most items on the list, and brings in a reasonable bid vs. all of the other bidders, gets the contract. It's not like consumer markets.

I still suspect the OP is charging too little, if his product is good, because being the low cost provider in just about any market is not a good place to be. Margins are thin, customer satisfaction is low (think eMachines and Packard Bell vs. Apple and ThinkPad) and you can't make enough to push forward on the projects that'll help you grow and provide better services.

[skmurphy]

I don't believe that leaves room for a "low cost" competitor at the bottom.

This is precisely the thinking that leads to getting disrupted by a different business model.

[SwellJoe]

"This is precisely the thinking that leads to getting disrupted by a different business model."

Please re-read my whole comment (and the one above it). I've explicitly discussed paradigm shifts that change the shape of the industry. A "different business model" is obviously one such type of shift. But given the description of the situation, I don't believe the OP is in such a moment in the history of his industry.

[skmurphy]

I did, it's just that I agree with josefresco's comment, or at least see that scenario as more likely. We have different interpretations of the same information. My other point is the firms that get disrupted always see the alternative as less attractive.

[SwellJoe]

If that's the case, we can't save his company. If he's being blindsided by a significantly different way of doing business, and one that undercuts his already razor thin margins by a large amount, then his company is already dead and just doesn't know it yet.

That could be the case, of course. So, you're right, we are just taking a different view of the provided data.