Tenders and Pricing
By Werner van Rooyen
17 March 2014
One of the most important parts of any tender is pricing.
All tender documents will tell you that it is not necessarily the lowest bid that will win the tender and that there are also other factors that influence the final decision. This might be true but be assured that you will lose more tenders than you will win if you have the highest price. Make sure you price your tender correct.
Dealing with the Standard Bidding Document 3 (SBD 3.1, 3.2 and 3.3), which is the pricing document, can be hair-raising. In these documents they talk about firm prices, non-firm prices, professional service providers, exchange rates and lots more confusing matters. There are three SBD 3 documents namely the:
- SBD 3.1 for firm prices
- SBD 3.2 for non-frim prices
- SBD 3.3 for professional service providers.
Many people ask the question - how must we work out our tender price? 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 than a tender for the supply of food for a government function. So to provide individual pricing techniques would be very difficult.
In general there are a couple of points that must be dealt with when you calculate your price. These include:
- Be precise; when your product that you supply is R10-26 then state it in the tender document as R10-26 and not as R10-00 or even R11-00. Small differences like these can amount to large amounts that can be lost, depending on the size of the tender.
- Ensure that you take all your costs into consideration; double check your pricing - something small left out can come back and bite you later on.
- Always remember to add Value Added Tax (VAT) at 14% to your price. The tender committees want to see the final price. They do not want to sit with a calculator and calculate what your price is supposed to be. Most tenders state that the price must include VAT.
- Try and quote firm prices, even if the tender duration in more than 12 months. Tender committees are hesitant for non-firm prices.
If you apply these points above, your pricing will be less of a challenge.
Another peace of advice is to draw-up your own pricing schedule and to refer on the SBD 3 document back to your own pricing schedule. The reason being: every supply is unique and to try and fit your pricing into the SBD 3 forms is usually undoable. You will find that almost all bidders do this. Your tender would not be judged as non-responsive by using a separate pricing schedule.
If you want to learn more about the tender process and how to complete a tender correctly and hopefully successfully, please visit our website at www.how2tender.com to find out more.
Until the next time - happy tendering.
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