Issue Date: 
Tuesday, September 20, 2016

10 Principles When Pricing Your Tender

Many people ask the question "how must we work out our tender price?", but there is no simple answer, because every tender is different, e.g. a tender for the supply of furniture will have a different pricing structure than a tender for the supply of food for a government function. So, to provide individual pricing techniques would be very difficult.

In general, there are these ten points that must be dealt with when calculating price:

  1. Price is king - ensure you price your product/service as low as possible, to stand a chance at winning a tender.
  2. Be precise, when the product supplied is R 101,26 then state it in the tender response as that and not as R 101,00 or even R 102,00. Slight differences like these can amount to large amounts that can be lost, depending on the size of the tender.
  3. Ensure that all the costs of delivering the product/service are taken into consideration; double check your pricing - something small not included can be to your disadvantage.
  4. Confirm prices of goods with your suppliers. Prices can change very quickly due to increases in fuel prices or exchange rate fluctuations.
  5. Always remember to add Value Added Tax (VAT) at 15% to your price, especially when it relates to Government tenders. Most tenders state that the price must include VAT.
  6. Ensure that all other applicable taxes are included in the tender price.
  7. Most importantly, never bid too low or too high;
    • Bid Evaluation Committees are well informed and they will know if a is bid too low or too high;
    • "    Bidding too low or too high might lead to a tender response being disqualified or marked as non-responsive;
  8. Pricing can be influenced by law as well. Several industries in South Africa, such as the cleaning industry, has minimum wages payable to employees;
  9. A suggestion is that if your usual mark-up is 25% then tender perhaps at 18% to 20%. Remember that you are going to save on direct costs as well as on other expenses such as advertising, telephone costs and much more. Use these savings to lower your price.
  10. Remember that in Government tenders you are going to be scored on your price, and currently price counts for 80 out of 100 points for tenders for less than R50 million, and 90 out of 100 points for tenders with a value of more than R50 million. The bidder with the lowest price receives the most points.

To learn more about this and many other tender conditions please attend one of our How-to-Tender workshops. Tender Workshop dates are published on our website at www.how2tender.com. For more information on the tender courses please email Werner at werner@how2tender.com.

This article was written by Werner van Rooyen, Director of HowToTender (Pty) Ltd. which specializes in tender consulting and tender training.

Title Closing Date Tender No.
Provision of existing 196m2 leased office accommodation for The Department of Culture Arts and Traditional Affairs at Naledi service point in Vryburg for a period of 36 months. 2019-01-17 11:00 PWR 133/18
Supply & delivery of plinths for minisub and ringmain unit 2018-11-29 10:00 DIE0014914
Supply & delivery of electrical equipment 2018-11-27 12:00 SCM04-2011-18
Supply & delivery of galvanized poles and pole caps 2018-11-29 10:00 DIC0025766 (READVERTISE)
Provision of existing 196m2 leased office accommodation for The Department of Culture Arts and traditional affairs at Kagisano Molopo service point in Ganyesa for a period of 36 months. 2019-01-17 11:00 PWR 124/18
Supply & delivery of blue jot – it down notebook – 75 with full colour branding. 2018-11-29 10:00 DCG0011888
Supply & delivery of seedling & trees 2018-11-27 12:00 SCM03-2011-18
Cleaning of Reservoirs and Towers 2019-01-22 10:30 JWOPS 015/17RT
Appoint a service provider for the construction of ten (10) timber wendy house units in various areas. 2018-11-27 14:00 1056812
Cleaning and Maintenance of Outfall Sewers. 2019-01-22 10:30 JW OPS 043/18
Printed Books 2018-11-27 14:00 PNQ2 PRINTED BOOKS
Construction of multipurpose community centre building - phase 2B white location, Knysna. 2019-01-23 12:00 T 31/2018/19
Supply and Delivery of One Automated Mineralogical Scanning Electron Microscope based mineral/phase analyser (QEMSCAN) including Training. 2019-01-24 10:00 ERIC0340
Consulting Services- Digital Archivist & Librarian within the Directorate of Information & Communication 2018-12-07 15:00 Re advert- AUC/DIC/IC/327
Supply of hygiene products and services. 2019-01-24 12:00 33/2018
Provision of basic sanitation services in informal settlements with The City of Johannesburg on an as and when required basis. 2019-01-25 10:30 JW 13855
The supply and delivery of water meters 2018-11-28 12:00 61954
Panel to provide travel management services. 2019-01-25 12:00 36/2018
Supply and installation of security parameter fencing at Matopie High Site, Franschhoek. 2018-11-28 11:00 FQ/SM: 75/19
Supply, delivery and installation of high security cage at miniature substation 2018-12-03 11:00 FQ/SM: 73/19

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Advantages and disadvantages of Consortiums

Consortiums are often considered as entities to use when responding to tenders in South Africa. The question that arises is whether to use a Consortium or a Joint Venture when responding to a tender. To help you with this we have compiled a list of advantages and disadvantages for both Consortiums as well as Joint Ventures. In this article we list the advantages and disadvantages of Consortiums. Look out for the same article on Joint Ventures.

Consortiums Advantages:

  • Easy to establish as there are no formal procedures... Read More
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