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.
Provision of banking services for a period of 5 years 2017-11-06 12:00 BID 09/17
Request for expression of interest from qualified entities to be enlisted in the database of the Department of Environmental Affairs for the implementation , operational support, planning and training projects for Expanded Public Works Projects (EPWP) for the Natural Resource Management Programmes 2017-09-29 11:00 E 1406
Procurement for supply and installation of Modular Structure at seven schools in the Eastern Cape Cluster 10 2017-10-09 11:00 DBE0108
Procurement for supply and installation of Modular Structure at seven schools in the Eastern Cape Cluster 9 2017-10-09 11:00 DBE0107
Procurement of Contractors to implement water, sanitation and fencing projects for 47 schools in the Eastern Cape for Cluster 6 2017-10-09 11:00 DBE0104
Procurement of Contractors to implement water , sanitation and fencing projects for 47 schools in the Eastern Cape for Cluster 1 2017-10-09 11:00 DBE097
Procurement of Contractors to implement water, sanitation and fencing projects for 47 schools in the Eastern Cape for Cluster 7 2017-10-09 11:00 DBE0105
Supply & Delivery of Voter Registration Devices 2017-11-07 11:00 IEC/ LG- 04/ 2017
Professional Services for the Master Plan of the Feeder Roads and Bridges. 2017-10-16 14:00 6019
Commercial Property Development 2017-09-29 14:00 COR53/2017
Mowing of Grass at Recreation & Parks Area 1.3 Halls, Pool and Bowling Greens 2017 2018 2017-10-11 14:00 W101800089
Reconfiguration of ERI TSS Workshop into a transformer assembly and repair works 2017-11-01 10:00 RFP/ERI/2017/ST
The Road Accident Fund (RAF) hereby invites experienced and suitable qualified service provider to provide Integrated Claims Management Systems (ICMS) over a period of five (5) years. 2017-09-26 11:00 RAF/ 2017/ 00038
SANParks wishes to appoint a partner to act as a single service aggregator for all ICT services to SANParks for a period of five (5) years with an option to renew. 2017-09-22 11:00 GNP- 007- 17
2 hectares of land for sale or development in Benoni suitable for 50 clusters,150 apartments or a mixed use development 2018-12-31 12:00 ERDT 0014
Customer care training R031700528
Supply: 600 pkt of paper sterilization crepe green 900x1300mm (100 sheet per pkt) ZnqSN604/ 16gaz
Supply and delivery of optical fibre test equipment SKA SA SKRF 001 2017
Consultancy services for the Design of a new Gender Policy for the AU for the period 2017-2023 No reference supplied
Supply & delivery of bakri balloon ZNQ 138/ 16/ 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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