Issue Date: 
Tuesday, September 20, 2016

10 Principles When Pricing Your Tender

Many people ask the question "how must we work out our tender price?", but there is no simple answer, because every tender is different, e.g. 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 these ten points that must be dealt with when calculating price:

  1. Price is king - ensure you price your product/service as low as possible, to stand a chance at winning a tender.
  2. Be precise, when the product supplied is R 101,26 then state it in the tender response as that and not as R 101,00 or even R 102,00. Slight differences like these can amount to large amounts that can be lost, depending on the size of the tender.
  3. Ensure that all the costs of delivering the product/service are taken into consideration; double check your pricing - something small not included can be to your disadvantage.
  4. Confirm prices of goods with your suppliers. Prices can change very quickly due to increases in fuel prices or exchange rate fluctuations.
  5. Always remember to add Value Added Tax (VAT) at 15% to your price, especially when it relates to Government tenders. Most tenders state that the price must include VAT.
  6. Ensure that all other applicable taxes are included in the tender price.
  7. Most importantly, never bid too low or too high;
    • Bid Evaluation Committees are well informed and they will know if a is bid too low or too high;
    • "    Bidding too low or too high might lead to a tender response being disqualified or marked as non-responsive;
  8. Pricing can be influenced by law as well. Several industries in South Africa, such as the cleaning industry, has minimum wages payable to employees;
  9. 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.
  10. 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 for less than R50 million, and 90 out of 100 points for tenders with a value of more than R50 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. For more information on the tender courses please email Werner at werner@how2tender.com.

This article was written by Werner van Rooyen, Director of HowToTender (Pty) Ltd. which specializes in tender consulting and tender training.

Title Closing Date Tender No.
Supply and Deliver Coin Counter Equipment 2018-12-18 11:00 GQ12182007
Repair and resurface of various roads in central business district of Upington 2019-02-01 14:00 TN099/2018
Supply and Deliver Note Counters Equipment 2018-12-18 11:00 GQ12182007
Appointment of consulting engineering firm for the planning, design and project management of water services for Hakskeen Pan 2019-02-01 14:00 TN100/2018
Terms of Reference for Consultant Gender Programme Expert Consultancy Services for Launching the AU Strategy for Gender Equality and Women’s Empowerment 2018-12-21 17:00 AUC/WGDD/C/252
For the supply and installation of HV Surge arresters. 2019-02-05 10:00 KBY/54341
Supply & deliver Tinned Wire Copper 1.6mm fusewire. 2018-12-18 11:00 SQ12181328
Supply & deliver Circuit Breakers 40amp 240volt,5ka CURVE 2 SFM1-G3 complete.no shrouds 2018-12-18 11:00 SQ12181328
Supply & deliver Energy Saving Flourescent Tubes T5 28W/840 1149MM long, Cool White. Osram, Phillips or approved equal. 2018-12-18 11:00 SQ12181328
Supply and deliver 667/TZ/30937/000 EFC Modules 128M Signal Controller -Siemens or approved equal 2018-12-18 11:00 GQ12182003
Supply and deliver Hydraulic Breakers- LH270 Atlas Copco or approved equal 2018-12-18 11:00 GQ11182001
Supply and deliver of Beach Markers 2018-12-14 11:00 GQ12182004
Rental of a digger loader (6-7 ton) for a the month of December 2018 and January 2019 2018-12-18 11:00 292257
Supply and deliver of Safety Helmets 2018-12-14 11:00 GQ12182004
Rental of bull dozer for the months of December 2018 and January 2019 2018-12-18 11:00 292038
Supply and deliver Padded Gloves 2018-12-14 11:00 GQ12182004
Supply and deliver Rescue Booties 2018-12-14 11:00 GQ12182004
Rental of light delivery vehicles (engine capacity 2000 cc) for January and February 2019 2018-12-18 11:00 292218
Rental of light delivery vehicles (engine capacity 1400 cc) for January and February 2019 2018-12-18 11:00 123456
Rental of a rear end loading (REL) refuse compactor - 19 m3 (double axle) refuse compactor truck, for December 2018 and January 2019 2018-12-18 11:00 234567

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Advantages and disadvantages of Consortiums

Consortiums are often considered as entities to use when responding to tenders in South Africa. The question that arises is whether to use a Consortium or a Joint Venture when responding to a tender. To help you with this we have compiled a list of advantages and disadvantages for both Consortiums as well as Joint Ventures. In this article we list the advantages and disadvantages of Consortiums. Look out for the same article on Joint Ventures.

Consortiums Advantages:

  • Easy to establish as there are no formal procedures... Read More
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