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.
Supply & deliver Conforming Bandage, close knit: Size 75mm 2017-10-27 11:00 ZNQ 231/ 17- 18
Supply, delivery of and off loading of shoe manufacturing materials to Witbank Management Area: Department of Correctional Services 2017-11-20 11:00 HO4/ 2017
06 months contract of cleaning of building at Dundee Regional Laundry Requirement: Bargaining Council Certificate for Cleaning 2017-11-01 11:00 346/ 2017/ 18
Supply, fit and commission Dental Chair System (Complete Package) according to HTS Specification C.E. NO. S86A (Surgical) 2017-10-27 11:00 ZNQ 201/ 17- 18
06 months contract cleaning of garden and grounds at Dundee Regional Laundry Requirement: Bargaining Council Certificate for Cleaning 2017-11-01 11:00 345/ 2017/ 18
Appointment of a service provider for the supply, delivery, commissioning and post purchase support of a field emission gun electron probe microanalyser 2017-11-20 11:00 CGS- 2017- 039KV
The rendering of a cleaning and hygiene services at the DOD archive center. 2017-11-20 11:00 CPSC- B- PC- 027- 2017
Supply and deliver Squint surgery set 2017-11-03 11:00 ZNQ: 684/ 17- 18
Opthalmic Autorefractor/ Autokeratometer/ Tonometer 2017-11-02 11:00 18/ 08/ 2017
Check and service medical gases as per scope of work 2017-11-02 11:00 60/ 2017- 18Maint
Appointment of a service provider to supply and service the discovery area hygiene services 2017-11-13 12:00 CDC/ 390/ 17
Check and service medical air compressors as per scope of work 2017-11-02 11:00 61/ 2017- 18Maint
Check electrical panel on boiler and build up new with all control, breakers, contactors overloads main switch, amp meters, photohelic 2017-11-02 11:00 52/ 2017- 18Maint
Servicing of autoclaving machine x 1 2017-11-17 11:00 ZNQ114/ 17/ 18
Supply and deliver Peak flow meter 2017-11-03 11:00 ZNQ: 391/ 17- 18
Servicing of nursing call system x 5 2017-11-17 11:00 ZNQ106/ 17/ 18
Servicing of boiler heating plant X1 KwaZulu-Natal 2017-11-17 11:00 ZNQ110/ 17/ 18
C1114.07: Routine road maintenance on roads in the Eland’s Bay Area. 2017-11-23 11:00 S085/ 17
Supply Optometric Refraction Station =01 Each 2017-10-30 11:00 ZNQ 449/ 17/ 18
C1114.06: Routine road maintenance on roads in the Malmesbury North Area. 2017-11-23 11:00 S084/ 17

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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