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.
Appointment of a service provider for operation and maintenance of Solar PV plants across the City of Ekurhuleni as per specifications 2018-11-27 15:00 BOQ.MI.11.40
Appointment of a service provider for mid-term performance review of the City of Ekurhuleni against its predetermined commitments for the current 2016/17 - 2020/2021 municipal term of council as per specifications 2018-11-22 15:00 GEQ.CORP.11.99
Supply and delivery of cartridges 2018-11-23 12:00 ELM-2/021/2018-2019
Supply and Delivery of Steel Shelves Units at West Coast District Municipality – Moorreesburg 2018-11-27 12:00 6/5/2/47
Refurbishment and Commissioning of Existing Telemetry Outstation at Besaansklip Reservoir 2018-11-27 12:00 6/5/2/347
Supply and Delivery of Electromagnetic Flow Meter at Withoogte 2018-11-27 12:00 6/5/2/167
Service Provider to Set Up the Venue and Do Decoration for Business Week for 150x People for 2 Days. 2018-11-27 12:00 RFQ / 488
Video Recording, Taking Pictures and 2x TV Screens for Exhibitors for 2 Days for Business Week. 2018-11-27 12:00 RFQ / 487
Supply and delivery of fire rescue services uniform for the period ending 30 June 2021 2019-01-18 11:00 BV 737/2018
Quote: 1x National Artist’s For IDP/ Budget Roadshow on the 02/12/2018 at Durnacol Sport Complexs 2018-11-27 12:00 RFQ/493
Quote : 1x Programme Director For IDP/ Budget Roadshow on the 02/12/2018 at Durnacol Sport Complexs. 2018-11-27 12:00 RFQ/492
Quote : 2x Stage, 4x Tables and 40x Chairs For Idp/ Budget Roadshow on the 02/12/2018 At Durnacol Sport Complexs. 2018-11-27 12:00 RFQ/491
Supply and Delivery of 220x Groceries for Senior Citizens Event. 2018-11-27 12:00 RFQ/489
Hire of 13x Buses for IDP/Budget Roadshow on the 02/12/2018 at Durnacol Sport Complexs 2018-11-27 12:00 RFQ/494
Supply and delivery of heavy duty mobile 4x4 chassis with crew cab 2018-12-07 11:00 BV 751/2018
Hire of Sound System for IDP/Budget Roadshow on the 02/12/2018 at Durnacol Sport Complexs 2018-11-27 12:00 RFQ/490
Construction of municipal office building at the De Koppen Water Treatment Works (WTW), Worcester 2018-12-07 11:00 BV 750/2018
Appointment of panel of three service providers to perform investigation support for MPAC for a period of three years as and when required - (RE-ADVERT) 2018-12-14 10:00 EMLM 23/2018
Supply and Delivery of 6m Steel Container to Fairview 2018-11-27 12:00 217/2018/19
For 1x Sliding Double Door Glass Fridge For Middelburg Laboratory 2018-11-22 11:00 RFQ 1420578

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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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