Issue Date: 
Thursday, October 31, 2019

Items that determine tender pricing

By Werner van Rooyen, Director of HowToTender (Pty) Ltd which specializes in tender consulting and tender training.

Many bidders that respond to tenders, struggle when it comes to calculating a price for a specific tender.  One of the reasons for this is that many Small Business Owners are usually new to the tender process and therefore they lack the necessary experience to price their bids correctly.

Without getting into the fundamentals of accounting there are two basic items that determine your tender price.  In fact, these two basic items should always be your guide when determining your price on the goods or services you sell.

The two items that determine pricing is:

  • Direct Cost; and
  • Indirect Cost.
  1. Direct Cost

Direct Cost is the cost that one pays to either:

  • Produce goods or services; or
  • The cost price you pay to procure goods or products that you will resell to your customers.

For instance, if you manufacture wooden chairs your Direct Cost will be the money you spend on purchasing the wood for the chairs.  Other Direct Cost in manufacturing wooden chairs would be wood glue, nails, and labour costs.

Thus, when responding to a tender you must take the utmost care that you include all your Direct Costs in your tender price.

  1. Indirect Cost

Indirect Cost is the expense that you must incur to run your business and these costs do not necessarily generate any income.  Some of the most common Indirect Cost that your business incurs will be:

  • Rent
  • Utility expenses such as electricity and water
  • Telephone
  • Stationery
  • Salaries and wages
  • Accounting fees

It is especially important to include Indirect Cost in your tender price.  Remember that the tender will form part of your normal day-to-day business and therefore it must contribute to your Indirect Cost. 

The question is how to calculate how much of the Indirect Cost is contributable to the tender.  There is not one specific rule but one of the more common rules is to estimate the time spend on servicing the tender and then use that to factor in the Indirect Cost into the tender price.  In other words, if you must spend 50% of your time servicing the tender then 50% of your Indirect Cost should be part of your tender price.

To learn more about this and many other tender conditions attend our “Become a Tender Expert” 2-Day workshops presented in Johannesburg, Pretoria, Durban, Port Elizabeth, and Cape Town.  Book and pay online at https://howtotender.co.za/tender-expert-form/

Contact us at wernervr@howtotender.co.za should you need more information.

You can also purchase a Tender Manual (Handbook) on our website https://howtotender.co.za/ which is a step by step guide how to respond to a South African Tender.  It includes examples of completed SBD forms.

Title Closing Date Tender No.
Provision of cleaning, hygiene and pest control services at GPAA offices 2020-06-22 11:00 GPAA 10/ 2020
Appointment of a security company to provide security services, Alarm installation with armed response in Bredasdorp, Anene Booysen Skills Development Centre 2020-06-19 11:00 002- 2020/ 2021
Appointment of a security company to provide security services, Alarm installation with armed response in Bethal, Gert Sibande Skills Development Centre 2020-06-19 11:00 004- 2020/ 2021
Appointment of a security company to provide security services, Alarm installation with armed response in Muden, Zibambeleni Skills Development Centre 2020-06-19 11:00 003- 2020/ 2021
Appointment of a panel of service providers for the procurement of the 32 inch IDTV for 2020 indegent matriculants 2020-06-19 11:00 USAF- IDTV/ 01/ 2020
Dube TradePort Corporation hereby invites proposals from Trend Micro accredited partners to provide Trend Micro Enterprise Protection Platform (EPP) for DTPC for a three (3) year period. 2020-06-23 11:00 DTP/ RFP/ 13/ CEO/ 09/ 2019
Supply, delivery, and installation, inclusive of setup of production scanners: 3 year period contract, various head offices 2020-06-17 11:00 ZNB 5336/ 2020- H
Provision of Security Services in the Departmental Offices and Institutions for a period of 36 months at CLUSTER 5 (King Cetshwayo District Offices) 2020-06-18 11:00 DARD05/ 20
Provision of Security Services in the Departmental Offices and Institutions for a period of 36 months at CLUSTER 4 (UMkhanyakude District offices) 2020-06-18 11:00 DARD04/ 20
Provision of Security Services in the Departmental Offices for a period of 36 months at CLUSTER 3 (ILembe District, UGu and UThukela District offices) 2020-06-18 11:00 DARD03/ 20
Provision of Security Services in the Departmental Offices for a period of 36 months at CLUSTER 2 (Zululand and Harry Gwala District Offices) 2020-06-18 11:00 DARD02/ 20
Provision of security services in the Departmental Offices, Institution and Residence for the period of 36 months at CLUSTER 1 (MEC Residence, UMgungundlovu District, Truro house, EThekwini District, Amajuba District and UMzinyathi District) 2020-06-18 11:00 DARD01/ 20A
Supply, deliver, offload, install and servicing of ablution and hygiene services for departmental offices, research stations and institutions for the period of three years 2020-06-19 11:00 DARD08/ 20A
Appointment of a service provider to rehabilitate the pumps at Makhathini Irrigation Scheme 2020-06-19 11:00 DARD07/ 20A
Supply, deliver and offloading of veterinary remedies at Department of Agriculture: Uthukela District Office. 2020-06-19 11:00 DARD06/ 20A
Printing, supply and delivery of promotional material for the South African Police Service: Division: Corporate Communication and Liaison on a once off basis 2020-06-30 11:00 19/ 1/ 9/ 1/ 65TS(19)
Supply and delivery of consumables used in the forensic science laboratories to the SAPS for a period of two (2) years 2020-06-18 11:00 19/ 1/ 9/ 1/ 69TD (19)
Implementation of Biogas and required associated training for DOD 2020-06-19 11:00 128
Supply, delivery, installation, commissioning, end-user training, of 21 x ICU beds: Dr Pixley Ka Seme Memorial Hospital: once-off 2020-06-17 11:00 ZNB 9768/ 2019- H
Request for proposal: Establishment of a frame agreement for provision of cafeteria and catering services at UNHCR RBSA Pretoria office 2020-07-02 16:00 RFP/020/HCR/RBSA/SUP/014.

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