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.
Xhariep District: 24 months preventative maintenance of freezer and cold room installation in state buildings 2019-08-13 11:00 BL19/ 017
Lejweleputswa District: 24 months preventative maintenance of freezer and cold room installation in state buildings 2019-08-13 11:00 BL19/ 018
Invitation to submit offers for vacant land in the Kayamandi, Stellenbosch Region 2019-08-13 11:00 S019/ 19
Supply and Delivery of Various Embossed Insignias (Qty 4436) for the SA Air Force 2019-08-12 11:00 SPU/ B/ DSS/ 007/ 19
Security services at West Rand Region for Gauteng Department of Social Development for a period of 18 months 2019-08-12 11:00 GT/ GDSD/ 043/ 2019
Supply and Delivery of Tag Key Stainless Steel Octagonal 50.0MM (Qty 1000 Pair) and Chain Bead Stainless Steel 0.635M Long (Qty 500 Pair) for the SA Air Force 2019-08-14 11:00 SPU/ B/ DSS/ 021/ 19
Appointment of a service provider to render standard cleaning services for the Department of Rural Development and Land Reform in the office of the Surveyor General for a period of twenty-four (24) months within Ehlanzeni District in Mpumalanga Province 2019-08-07 11:00 RDLR- MP0003 (2019/ 2020)
The appointment of a service provider to supply and deliver moulds for Mamre Concrete Project located in the City of Cape Town Local Municipality, Cape Metropolitan District in the Western Cape Province. 2019-08-12 11:00 SSC WC 05 (2019/ 2020) DRDLR
Supply and Delivery of Duffel Bags Blue Grey (Qty 1000) for the SA Air Force. 2019-08-12 11:00 SPU/ B/ DSS/ 017/ 19
The National Department of Public Works invites interested parties to submit their applications to hunt the listed animals below for a period not exceeding the hunting season in terms of the Nature and Environmental Conservation Ordinance 19 of 1974 Sections 39 and 40. 2019-08-13 11:00 DPE03/ 2019
Appointment of panel of contractors to render a service of maintenance of water supply and sewerage network for 24 months in Sekhukhune & Capricorn District. 2019-08-13 11:00 PLK 19/ 12
Appointment of panel of contractors to render a service of maintenance of water supply and sewerage network for 24 months in Waterberg District. 2019-08-13 11:00 PLK 19/ 11
Supply and Delivery of Gorget Patches (Qty 150), Hand Embroidered Cap Badges (Qty 105) and Gold Embroidered Onlays for Women Hats (Qty 40) for the SA Air Force. 2019-08-13 11:00 SPU/ B/ DSS/ 006/ 19
Appointment of panel of contractors to render a service of maintenance of water supply and sewerage network for 24 months in Vhembe District. 2019-08-13 11:00 PLK 19/ 10
Supply & Maintenance of electronic student assessment & placement tool to all Westcol campuses for a period of 24 months. 2019-08-12 11:00 WT 2019/ 0002
Appointment of an experienced service provider to render travel and related services to the institution for a period of 24 months 2019-08-12 11:00 WT 2019/ 0001
Website Development, Maintenance And Support Administration Services for a period of 36 months for Capenature 2019-08-16 11:00 WCNCB 02/ 07/ 2019
The Appointment of an Accredited Service Provider for The Supply, Installation, Integration, Operationalisation and Maintenance of a Vulnerability Assessment and Management Solution/Tool for a Period of Three (3) Years. Tenable Nessus Or Equivalent. 2019-08-12 12:00 UMALUSI(19- 20) T0006
Appointment of panel of contractors to render a service of maintenance of water supply and sewerage network for 24 months in Mopani District. 2019-08-13 11:00 PLK 19/ 09
Kimberley Family Law Centre: Provisioning of cleaning services for 36 months. (2150.79m²) 2019-08-13 11:00 PF24/ 2019

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Tenders and VAT

By Werner van Rooyen

31 January 2019

One question that gets raised during each HowtoTender Workshop is must my business (or I) be registered for Value Added Tax (VAT) in order for me to respond to a tender? Or, must I register my business for VAT?

The answer according to the VAT Act, 1991 (Act No. 89 of 1991) is simple:

  • If your turnover is more than R1 million per annum then you have to register your business (or yourself in the case of a sole proprietor) for VAT.
  • There are commodities that are exempt from VAT and if you... Read More
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