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.
Replacement of passenger lifts at the University of KwaZulu-Natal, Howard College 2018-07-04 12:00 UKZN RFB 08/18
For supply, delivery and installation of fall protection equipment (Lifelines) Germiston Region. 2018-06-26 10:00 TE18-GMX-08K-03847
Radiographic examination of Thermite welds utilising TFR Xray equipment for a period of two years on an “as and when required” basis. 2018-06-26 10:00 RFP HOAC-HO-26224.
Provision of routine testing of substation protection at the TPL Pumpstations for 2 year period. 2018-06-26 10:00 PYP/W1/6/21/1789
Operator to operate and manage Belvedere Guest House, Groendack and Rangers House 2018-07-04 11:00 MTPA/1718/CEO02
Supply of electrical material to Hantam Municipality for a period of 1 year (01 July 2018 - 30 June 2019). 2018-06-26 12:00 NC065/T05/2018
Solar Photo Voltaic Generation Project. 2018-06-26 12:00 PEH 139/VB
Appointment of a service provider for supply and delivery of harnesses. 2018-07-03 11:00 DVS010- 2018/19
Appointment of a service provider for supply delivery of vehicle bins. 2018-07-03 11:00 DVS009- 2018/19
Meter Reading Services. 2018-07-03 12:00 02/2018
Construction of Rhombus Lethabong 88kV (25km) Chickadee line. 2018-07-03 14:00 PTA TEN 2411
Panel of Subcontracting Laboratory for Mechanical Testing and Chemical Analysis for 3 year contract. 2018-07-04 11:00 RFQ 1846
PF sampling and particles size analysis on unit 1 -6 at Duvha Power Station. 2018-07-05 10:00 MPGXC005176
Emalahleni Local Municipality Mpumalanga invites tenders for the electrification of 1100 residential units in wards 12 and 15 Siyanqoba Township. 2018-07-06 11:00 ELM 12/2018
Supply and install bulk electrical supply including transformers, switchgear, MCC and sub-station buildings. 2018-07-17 12:00 1924701 – E004
Design, Print and delivery of African Union Commission 2019 Diaries and Calendars for DIC Directorate. 2018-07-06 15:00 AUC/DIC/G/241
Bid to supply the complete range of equipment for a radio pharmacy in support of the state-of-the-art PET/CT system at the Node for Infection Imaging on Tygerberg Hospital premises. The equipment will include two hot cells, a laminar air flow cabinet, radionuclide dose calibrator, refrigerator and freezer, as well as several other items listed in the specifications. 2018-07-20 11:00 FBD-SCM-2018-TEN-0050
Collection; Transportation and disposal of solid waste in Lenyenye. 2018-07-13 12:00 SCMU 07/2018
Supply: Gully grate - material: polymer; grating. 2018-07-12 14:00 GE11802060
Supply, Deliver and Installation of a Capped Geographic Information System (GIS) Enterprise License Agreement and Support/Maintenance for a period ending 30 June 2021 2018-07-06 12:00 B/SM 107/ 18

Pages

Tender adjudication process

The SBD/WCBD6.1 document must form part of all bids invited.  It contains general information and serves as a claim form for preference points for Broad -Based Black Economic Empowerment (B -BBEE) Status Level of Contribution, and explains how tenders or bids are decided.

The document says:

  • The bidder obtaining the highest number of points will be awarded the contract.
  • Preference points shall be calculated after prices have been brought to a comparative basis.
  • Points scored will be rounded off to two decimal places... Read More
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