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.
NDPW: Durban Workshops: 24 Months Term Contract - Supply of Material for Electrical. 2017-11-27 11:00 DBN17/ 10/ 05
Bloemfontein deeds office: Upgrading of sewer system CIDB grading 3CE or higher 2017-11-28 11:00 BL17/ 023
The Western Cape Government Department of Human Settlements invites tenders for the construction of civil services for various erven and the building of FLISP housing units. 2017-11-24 11:00 HSC 07 + 08/ 2017/ 2018
Replacement school: Kwafuku Primary School; Philippi 2017-12-05 11:00 S093/ 17
Construction of a replacement school: Disa Primary School; Strand 2017-12-07 11:00 S097/ 17
Replacement school: Crestway High School; Retreat 2017-12-05 11:00 S092/ 17
Replacement school: Turfhall Primary School; Athlone 2017-12-06 11:00 S094/ 17
Construction of a new school: Wallacedene Primary School; Kraaifontein. 2017-12-06 11:00 S095/ 17
Construction of a replacement school: Willows Primary School; Heideveld 2017-12-07 11:00 S096/ 17
Drilling and geotechnical services for the preliminary design of the Pietermaritzburg ring road on National route 3 2017-12-01 14:00 NRA N.003- 023- 2010/ 1D- SS1
Vrede SAPS: Police station and housing units: Condition based maintenance on structural, electrical and civil elements CIDB grading 4GB or higher and 3GB PE or higher 2017-11-28 11:00 BL17/ 024
Provision of Office Accommodation: Springbok Satellite Office for a period of 5 years. (Leases ranging from seven to ten years will also be considered). 2017-12-08 11:00 35/ 2017
Provision of Office Accommodation: Groblersdal Satellite Office for a period of 5 years. (Leases ranging from seven to ten years will also be considered). 2017-12-08 11:00 34/ 2017
Provision of Office Accommodation: Groblersdal Satellite Office for a period of 5 years. (Leases ranging from seven to ten years will also be considered). 2017-12-08 11:00 34/ 2017
Provision of Office Accommodation: Vryheid Justice Centre for a period of 5 years. (Leases ranging from seven to ten years will also be considered). 2017-12-08 11:00 32/ 2017
Provision of Office Accommodation: Modimolle Justice Centre for a period of 5 years 2017-12-08 11:00 33/ 2017
Provision of Office Accommodation: Tzaneen Justice Centre for a period of 5 years. 2017-12-08 11:00 37/ 2017
Supply of Hygiene Equipment and Maintenance Services to Gauteng Department of Education Offices for a specific term contract for period of 3 years 2017-11-24 11:00 GT/ GDE/ 158/ 2017
NW384 - Ditsobotla Local Office Accommodation 2017-11-24 11:00 IEC/ NW- 03/ 2017
NW393 - Mamusa Local Office Accommodation 2017-11-24 11:00 IEC/ NW- 04/ 2017

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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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