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.