Issue Date: 
Tuesday, September 20, 2016

10 Principles When Pricing Your Tender

We are often asked how to work out a tender price? But there is no straight answer because every tender is different. The fact is that a tender for the supply of furniture will have a different pricing structure to that of the supply of food for a government function. So to provide individual pricing techniques would be very difficult.

In general, there are ten points that must be considered when calculating price. These are:

  • Price is king – ensure that you price your product or service as low as possible in order to stand a chance of winning a tender.
  • Be precise; when the product supplied is R101-26 then state it in the tender response as R101-26 and not as R101-00 or even R102-00. Small differences like these can result in large amounts that can be lost, depending on the size of the tender.
  • Ensure that all the costs of delivering the product is taken into consideration; double check your pricing – omitting something small can come back and bite you later on.
  • Confirm prices of goods with your suppliers – prices can change very quickly due to increases in fuel prices or exchange rate fluctuations.
  • Always remember to add Value Added Tax (VAT) at 14% to your price especially when it relates to Government tenders. Most tenders state that the price must include VAT.
  • Ensure that all other applicable taxes are included in the tender price.
  • The most important piece of advice on Pricing: never bid too low or too high;
    • Bid Evaluation Committees are well informed and they will know if a bid is too low or too high;
    • Bidding too low or too high might lead to a tender response being disqualified or marked as non-responsive;
  • Pricing can be influenced by law as well – there are several industries in South Africa, such as the cleaning industry, which has minimum wages payable to employees;
  • 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.
  • 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 less than R1 million and 90 out of 100 points for tenders with a value of more than R1 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.

Learn to earn

Title Closing Date Tender No.
Construction of the extension of Taung library 2018-01-02 12:00 SCM/SS06/2017/2018
Supply and delivery of Safety Clothing for the Langeberg Municipality, for the Period of 3 Consecutive Years 2017-12-08 12:00 T 32/2017
The Supply and delivery of 7 x Sealing End 132kv 400SQ CU of D2872 2018-01-23 13:00 DX 756
Supply, delivery and installation of Sewer Pumps Mandela Square Montagu 2017-12-01 12:00 TE 87/2017
Supply: Guard rail 2017-11-27 14:00 GE11800781
Supply Water distribution material 2017-11-30 16:00 GE11800782
Supply Bricks 2017-11-27 14:00 GE11800783
Supply Binding wire 2017-11-27 14:00 GE11800784
Supply: 1 each x tokyo keiki ufl-30 clamp-on flow meter 2017-11-30 14:00 GE11800792
Supply and install 2x 110mm sleeves for electrical cable across Voortrekker Road (R303) in De Doorns opposite new Fire Station 2017-12-12 11:00 277634
Hiring of Audio-Visual for Mayoral Title deed Handover 2017-11-28 09:00 SP11800073
Supply: DTP42-41DZ Vortex Immersible Pump 13Kw 3Phase 2017-11-30 14:00 GE11800794
Clearing of Alien Plants at Stettynskloof 2017-11-27 11:00 277576
Hire of 18 X Flush portables and 2 paraplegic toilets with 2 Janitors for Atlantis Concert in the Park event 10 December 2017, Atlantis Smart Park, cnr of Grosvenor Avenue and Enchantress Crescent, Saxonsea, Atlantis from 08h00 till 21h00 2017-11-28 09:00 SM11800310
Supply: 10 each x hardboard; tempered 2017-11-27 12:00 GG11800270
Supply: Hardware items 2017-11-29 12:00 GG11800272
Supply: Hardware items 2017-11-29 12:00 GG11800271
Supply rhino board and facia board 2017-11-29 12:00 GG11800274
Supply: 5 each x adhesive;wood;wht;2.5l 2017-11-27 12:00 GG11800273
Repair, Maintenance and Testing of 11 kV and 66 kV Cables 2017-12-07 10:00 ED8/2017

Pages

Functionality and Tenders

In all competitive bids (tenders) you as the bidder will have to respond to Functionality. You will need to score a set minimum number of points, measured as a percentage, on Functionality of a competitive bid (tender) in order to advance to the next phase of evaluation in the tender process.

Usually Organs of State evaluate competitive bids (tenders) as follows:

  • The tender response is evaluated on Functionality where the bidder must score points out of a maximum of 100 points.
  • A threshold of between 65 to 75 out of 100 points... Read More
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