Cost Proposal

A cost proposal (also called a price proposal or business volume) is the section of a proposal that details the financial aspects of the proposed solution. It includes labor rates, materials costs, travel, subcontractor costs, overhead, profit margins, and any other expenses required to perform the work.

In government contracting, cost proposals must comply with specific regulations including the Federal Acquisition Regulation (FAR) cost principles. They must be reasonable, realistic, and complete. Cost realism analysis may be performed by the government to ensure proposed costs are sufficient to perform the work.

A winning cost proposal balances competitiveness with realism. Pricing too low raises concerns about the bidder's understanding of the work scope, while pricing too high reduces competitiveness. The cost proposal should align perfectly with the technical approach — every task and resource described in the technical volume should have a corresponding cost element.