Beware! That Shiny Margin may be a Mirage.
I’ve seen it too often. During my years building solutions, mentoring bid teams, rescuing troubled accounts, and involvement in complex deals from opportunity identification to contract, one thing stands out: a high-margin line on a bid’s Profit & Loss sheet doesn’t mean the deal is sound.
The numbers might look good. Executives might get excited about projected savings. But after enough deals have unravelled, you realise a healthy margin on paper doesn’t shield you from the hard truths of delivery.
The Illusion of Margin
One of the most common traps in major bids is how optimistic assumptions get hardwired into financial models and treated as certainties. In theory, by the time a deal is ready for signature, those assumptions should be minimal—because proper due diligence should have flushed them out along the way.
But let’s be honest: bid teams are under enormous pressure. Timelines are brutal, information is incomplete, and the pressure to produce a winning price is relentless. So it’s not surprising that some assumptions stick. What is surprising is how rarely this reality is acknowledged in the bidding process itself.
People refer to what a similar deployment cost years ago, glossing over how much the technology or delivery model has changed since. Others build deal structures around untested timelines or labour savings that haven’t been validated. There’s often a quiet assumption that the customer’s side will be frictionless too—that they’ll be ready, aligned, and responsive. These assumptions aren’t always wrong, but they’re rarely nailed down, and often they’ve gone unchallenged.
By the time they hit the spreadsheet, they’re treated as locked in. There’s no buffer, no fallback, and in too many cases, the contingency has been carved down to a token amount—just enough to hit a gut-feel “win price,” but not enough to withstand reality.Who Owns the Risk?
I’ve seen bid teams propose “fantastic margin” deals with hardly any talk about where the real risk lies. Maybe it’s a fixed-price contract that looks brilliant in Excel, but if you’re liable for performance shortfalls, added scope, or unforeseen complexities, that hefty margin can vanish the moment something goes off track.
A deal isn’t only about numbers. It’s about knowing who foots the bill if reality doesn’t align with the plan—which, in my experience, is more common than not. Sometimes the margin has been trimmed down just to sign the contract. Other times, the margin is so big that the salesperson walks away with a good commission, leaving delivery teams to grapple with unwritten promises and sudden demands.
When It’s a Marathon, Not a Sprint
Services engagements often stretch over years, not months. It’s easy to assume that any vague or missing pieces in the contract can be worked out later. But in reality, things start shifting almost immediately. People leave. Priorities change. Technology moves faster than at any point in my 30 years in IT. The environment you designed for might be unrecognisable a year in—and if the deal isn’t built to adapt, you’re asking for trouble.
That’s why alignment between the contract, solution, and financial model isn’t just a nice-to-have. It’s essential. If the contract doesn’t clearly state how to handle scope changes, tech shifts, or new regulatory demands, you’ve effectively signed a blank cheque for confusion.
You need a change management system that isn’t just theoretical—it needs teeth. A shared governance model that defines how decisions get made, who can authorise costs, and when the solution should be reviewed. Without that, you’re not managing change—you’re reacting to it. And over a multi-year contract, that can erode both delivery and trust.The Impact on Culture
When the Team Pays the Price
Even when the numbers hold up—no legal blow-ups, no catastrophic tech failures—I’ve seen plenty of “good deals” wear down the very people delivering them.
Why? Because the deal was built on overly hopeful assumptions. The workforce model was paper-thin, leaving delivery teams stretched from day one. Or the handover was messy, with the people who sold the dream disappearing before the hard work began. The new team is left holding a bag of commitments they never signed off on.
If the only way to hit the margin is by burning out your staff, you have to ask: was it ever a good deal to begin with?
This isn’t rare. It happens far too often. And when it does, you’re left with exhausted teams, reputational damage, and a customer questioning the whole relationship.
What Makes a Deal Good?
A good deal doesn’t crumble when you push back on it.
It includes the real cost of delivery, not just a rosy guess.
It shares risk—no single party should be left holding the bag.
It allows for surprises, which are inevitable over a multi-year span.
It nurtures a work environment people can sustain.
It explicitly lays out change management and governance, so both sides know how to handle evolving needs.
Of course, it has a margin—but not one balanced on a stack of unverified assumptions.
So if you’re weighing a deal that promises huge gains, pause and investigate how it’s been put together. Where do those numbers come from? How many of them have truly been pressure-tested? Who’s on the hook when real life doesn’t match the spreadsheet?