You just won that massive RFP at 4% margin. Your sales team is high-fiving. Your proposal manager is already updating their LinkedIn profile with the win. But your CFO? They're quietly updating their resume.
Here's the uncomfortable truth every bid team needs to hear: that "win" you're celebrating might be the most expensive loss your company takes this year.
The Seductive Math Behind Bad RFP Wins
Let's do the brutal math together. Your team bid on 60 RFP opportunities last year. Won 12. That's a 20% win rate—not terrible, right?
Wrong question.
The right question: How many of those 12 proposal wins are actually making you money after all delivery costs?
We see this pattern at companies of every size. Organizations chasing revenue targets, burning through proposal teams and SMEs, winning deals that slowly bleed them dry. One of our enterprise customers recently told us they won a $2.4M contract at 1.3x multiplier. The project manager's response? "How exactly am I supposed to make money on this when my loaded cost rate is already 1.2x?"
They couldn't. Nobody could.
Why Low-Margin RFP Wins Destroy More Value Than Losses
When you lose a bid, you lose the time and cost of pursuit. Maybe $10,000 to $50,000 depending on complexity. It stings, but you move on.
When you win a low-margin deal, here's what actually happens:
Your best people get trapped. That senior engineer who should be designing innovative solutions? They're now managing a contract where every hour counts against a razor-thin margin. No room for creativity. No room for excellence. Just survival.
You create a culture of mediocrity. Teams learn quickly that cutting corners is the only way to survive these contracts. Quality drops. Morale tanks. Your reputation follows.
You block better opportunities. While you're tied up delivering a 4% margin contract, your competitor just won the 18% margin deal you didn't have capacity to pursue.
One mistake wipes out everything. Ship the wrong item? Miss a deadline? Misread a requirement? At 4% margin, a single error doesn't just eat your profit—it puts you underwater. We've seen companies spend six months and five staff members fixing a shipping error on a contract with $6,000 total profit. Do that math.
The Pre-Sales Framework: Your RFP Walk-Away Criteria
Here's the discipline framework your bid team needs before the next RFP hits your desk:
1. Set Your Floor (And Actually Stick To It)
Establish minimum acceptable margins by contract type:
New customers: 15% minimum
Existing relationships: 12% minimum
Strategic "foot in the door" deals: 10% minimum (with written executive approval)
Below these thresholds? The answer is no. Period.
2. Calculate True Cost to Serve
Most proposal teams miss these hidden costs:
Transition and ramp-up time
Compliance and reporting overhead
Management attention (yes, this has a real dollar cost)
Risk buffer for inevitable scope creep
Add 20-30% to your initial cost estimates. Still profitable? Then proceed with your bid.
3. The "Winning Hangover" Test
Before submitting any proposal, ask your delivery team: "If we win this RFP at our proposed price, will you be excited or terrified?"
If the answer isn't genuine enthusiasm, you're about to make an expensive mistake.
The Counterintuitive Truth About Bid Selectivity
Here's what happens when you start saying no to bad deals:
Your RFP win rate actually increases. When you bid 20 carefully selected opportunities instead of 60 scattered shots, your proposals get better. Your team has time to develop compelling value propositions. Your pricing gets strategic instead of desperate.
Your margins expand on the deals you do win. With fewer proposals to manage, you can invest in understanding customer value drivers. You price to value, not just to win.
Your pre-sales team starts loving their job again. Nothing kills proposal team morale faster than constantly losing. Except maybe winning deals that make everyone's life miserable for the next three years.
How to Sell "No" to Your Sales Team
Your sales team won't thank you immediately for walking away from low-margin RFPs. Here's how to get them onboard:
Show them the fully-loaded math. Don't just show revenue. Show profit per deal, profit per hour invested, and opportunity cost of bad wins.
Celebrate strategic walks. Make walking away from a bad RFP as celebrated as winning a good one. Create a "Deals We Dodged" board. Share stories of competitors stuck in low-margin contracts.
Redirect their energy. Every bad opportunity you skip frees up capacity for pursuing great ones. Help them see that saying no to the 4% deal means saying yes to finding the 15% deal.
The Questions That Change Your Proposal Strategy
Before your next RFP pursuit decision, ask:
Would we be thrilled to win this at our walk-away price?
Will delivering this contract make us better at what we do?
Can we make at least 20% margin even if things go moderately wrong?
Would our best SMEs want to work on this project?
Four "yes" answers? Proceed with confidence.Anything less? You already know what to do.
The Bottom Line on Proposal Profitability
Not all revenue is good revenue. Not all RFP wins are victories.
The companies that thrive understand this fundamental truth: It's not about how many proposals you win. It's about winning the right deals at the right margins with the right teams.
Your spreadsheet might show revenue growth from those low-margin wins. But your proposal team knows the truth. They feel it every day in the thankless grind of delivering contracts that were disasters from the moment you signed them.
So make the hard choice. Set your standards. Defend your margins.
Because the only thing worse than losing an RFP is winning one that slowly destroys your company from the inside out.
Teams avoid 4% deals when they see scope, risk, and effort early. Trampoline turns an RFP into a clear board in minutes. Every requirement becomes a card with owner, priority, and due date. The AI flags gaps and inconsistent asks before they turn into cost. You can create a compliance matrix and pull proven answers from past proposals. That gives you a quick, evidence-based effort view for bid or no-bid and for pricing. If you proceed, drafting, reviews, and final assembly happen in one place, including the Writer extension for deliverables. If you pass, you spent hours, not weeks, and your work still enriches your library for next time. We have seen teams cut response time by 60 to 80% by centralizing this process.