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.
Termination Kits 11kv 35-70mm2 2017-12-15 12:00 B495/2017/18
Supply: Water distribution materials 2017-12-18 14:00 GE11800863
Installastions only of EADS/CAR-9 Car Kits for mixed purpose fleet of vehicles 2017-12-19 11:00 CSQ12171196
Supply: Water distribution materials 2017-12-18 14:00 GE11800862
Supply and Install a monitoring alarm system in Coega Substations 2017-12-19 11:00 CSQ12171196
Supply: Guard rail 2017-12-14 14:00 GE11800860
Supply Glass beads 2017-12-18 14:00 GE11800861
Supply Rubber insertion 2017-12-14 14:00 GE11800859
Supply Thinners for road marking paint 2017-12-14 14:00 GE11800858
Supply 10 each x tarpaulin 2017-12-13 12:00 GG11800387
Supply: 20 each x door 2017-12-15 12:00 GG11800405
Supply: Electrical - components 2017-12-13 11:00 GH11800320
Supply Plastic waste paper bins, swing top, 20Lt 2017-12-16 15:00 GB11800587
Supply and delivery of telephones 2017-12-18 11:00 GK11800368
Upgrading of the Du Noon Public Transport Facility, Du Noon, Cape Town 2018-02-02 10:00 192Q/2017/18
Supply and delivery of tablet charging trolleys 2017-12-18 11:00 GK11800366
Supply: Hardware: convex mirrors 2017-12-13 12:00 GG11800389
Supply and delivery of trees 2017-12-18 11:00 278649
Supply: Hardware: pvc tarpaulins 2017-12-15 12:00 GG11800390
Supply and Delivery of Testing, Calibrating and Programming Equipment for Substation Equipment in Gauteng Province 2018-02-12 12:00 44/12/2017/GAU-EL

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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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