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.
Supply: Pens and rulers 2017-11-24 12:00 GL11800414
Facilitation using different Methodologies 2017-11-28 09:00 SM11800306
Office Type Container For Milnerton Lagoon 2017-11-28 12:00 SB11800476
Appointment of a service provider: For the development of the air quality management plan (AQMP) for Ehlanzeni Distirct Municipality 2017-12-08 12:00 EDM/26/2017-18
Facilitation and Administration of the Recruitment for the Municipal Manager Post 2017-11-24 12:00 6/5/2/373
Supply spares for bush cutter 2017-11-23 10:00 WC11801119
Hire of Tyre Mounted Recycler 2017-11-24 12:00 6/5/2/56
Request for information for the development and implementation of a health management system, administrative and technical support 2017-12-12 10:00 TE117-KLP-8DW-10630
For the provision of services: Supply Management Related training courses 2017-12-12 10:00 TE17-KLP-8DW-9286
Professional Services – Corrosive Audit of the Hopefield Besaansklip Iccp System 2017-11-24 12:00 6/5/2/373
Provision of the Supply of Security services at various sites in the Eskom Eastern Cape Operating Unit. 2017-12-12 10:00 ETW5699
Supply of Telemetry Outstation to be Incorporated in Existing System 2017-11-28 12:00 6/5/2/225
Supply and delivery of Acoustic Foam at Withoogte 2017-11-28 12:00 6/5/2/377
For the provision of transportation service of Germiston wheels for a period of three (3) years 2017-12-12 10:00 TE17-KLP-09X-9654
Appointment of a service provider to assist the Community Schemes Ombud Service with Office Space for Lease for Gauteng and Head Office, for a period of five (5) years 2018-01-09 11:00 CSOS001-2017
Supply and Delivery of Medium (11kv) and Low Voltage (420.230V) Electrical Equipment’s, Cables and other Electrical Equipment’s for a period of three (3) years 2018-01-10 12:00 81/2017
Supply Accessories 2017-11-29 10:00 GA11800221
Repairs to pool basin at Langa Pool 2017-11-27 14:00 SB1180202B
Supply training bibs 2017-11-30 10:00 GA11800222
Supply Golfers 2017-11-30 10:00 GA11800223

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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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