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.
Calibration of electrical instruments 2019-01-29 10:00 WRAC/KBC/28149
Appointment of a Service Provider to Supply and Deliver Nonflush Chemical Toilets to Various Areas in Theewaterskloof Municipal Area On an Ad-Hoc Basis for the Period From January 2019 To June 2020 2019-01-18 12:00 DEV 09/2018/19
The provision of rigging resources to Koeberg Operating Unit 2019-01-29 10:00 KBG1874
Implementation of energy saving measures and initiatives for George Municipality: Replacement of Aircons, Heatpumps, 7 building lighting lamps. 2019-02-01 12:00 ENG040/2018
Supply and delivery of water filtration sand to Petrosa GTLR in Mossel Bay (call off contract) 2019-02-12 11:00 CTT20925
Supply and delivery of mineral slag sand and grit to PetroSA GTLR in Mossel Bay (call off contract) 2019-02-12 11:00 CTT20926
Requests proposals to perform the tasks on behalf of the entity to perform a revaluation of electrical infrastructure assets and owner occupied land and buildings. The appointment will be valid for twenty four (24) months. 2019-01-21 11:00 RFP 26/2018
Resin replacement 2019-02-07 10:00 MPGXC005240 R1
Supply and delivery of care kits for community health workers for Free State Department of Health 2019-02-08 11:00 DOH (FS) 13/2018/2019
Plumbing services 2019-02-14 10:00 MPGXC005431
Specification for security services at Maletswai One Stop Centre in the Joe Gqabi District for a period of 3 years 2019-02-04 11:00 SCMU4-18/19-0040
Appointment of service provider to provide security services at Chris Hani District – Melton Gardens Child and Youth Care Centre for the Department of Social Development, Eastern Cape for a period of three (3) years 2019-02-04 11:00 SCMU4-18/19-0041
Specification for security services at Umtata One Stop Centre in the OR Tambo District for a period of 3 years 2019-02-04 11:00 SCMU4-18/19-0039
Development of a Plan For Incorporating Biomimicry and Bio-Wise Principles Into Existing and Planned Projects 2018-12-21 12:30 SCM/RFQ/2019/032/EDP
Appointment of service provider to provide security services at Protea Child and Youth Care Centre for the Department of Social Development, Eastern Cape for a period of three (3) years 2019-02-04 11:00 SCMU4-18/19-0029
Appointment of service provider to provide security services at or Tambo District – Qumbu Child and Youth Care Centre for the Department of Social Development, Eastern Cape for a period of three (3) years 2019-02-04 11:00 SCMU4-18/19-0038
Appointment of a Panel Of Attoneys to Assist Sedibeng District Municipality with Legal Related Matters on an Ad Hoc Basis. 2019-01-08 12:00 8/2/1/2-2018
Appointment of service provider to provide security services at Buffalo City Metropolitan Municipality – Silver Crown Old Age Home for the Department of Social Development, Eastern Cape for a period of three (3) years 2019-02-04 11:00 SCMU4-18/19-0037
Provision of Short Term Insurance for the Period From 01 July 2019 to 30 June 2022 2019-01-18 12:00 FIN 01/2019/20
Consulting engineering services for the routine road maintenance of national route N2 section 8 km 80.08 to section 10 km 73.50 and national route R62 section 6 km 36.76 to section 8 km 2019-02-04 14:00 X.003-030-2019/1F

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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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