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 of Custon Rescue Paddle Board 2018-12-14 11:00 GQ12182004
Tenders are invited for the maintenance of ABB SCADA SYSTEM 2018-12-14 11:00 CSQ12181503
Rental of landfill compactor for December 2018 and January 2019 2018-12-18 11:00 345678
Advertisement for suitable Suppliers and Service Providers to apply and become part of Save the Children South Africa’s Supplier Database 2019-02-15 12:00 No reference number
Supply & deliver Decalit Chokes Oglis 0.5,100watt,B80 230volt for 1000watt High Pressure Fittings 2018-12-14 11:00 SQ11181321
Demolition of Redundant Structures Citywide 2019-02-08 10:00 196Q/2018/19
Supply & deliver Liquefied Petroleum Gas in 9kg cylinders,to S.A.B.S 690 specifications 2018-12-14 11:00 SQ11181321
Supply & deliver Boxes With Lids 455 L X 340 W X 290mm H Doubled Walled on sides with handles 2018-12-14 11:00 SQ11181321
Supply & deliver Envelopes Manilla With Window Face 220mm x 110mm. Straight flap cut type KE.80/100gm. 2018-12-14 11:00 SQ11181321
First Line Response- Distribution Area East, North and South 2019-02-08 10:00 192S/2018/19
Term Tender for Supply, Installation and Retrofitting of Water Efficient Technologies Citywide 2019-02-11 10:00 197Q/2018/19
Supply & deliver Truck Tyres 12R22.5 2018-12-13 11:00 SQ12181325
Supply & deliver Couplings Rubber DISC F-60 tyre 2018-12-13 11:00 SQ12181325
Supply & deliver Pipe,Coil Safe 15mm X 50mtr 2018-12-13 11:00 SQ11181312
Supply & deliver Electrical Spring Connectors Part no. 200665 Blue & Grey connectors.Scotc hlok 3M or approved equal 2018-12-13 11:00 SQ11181312
Tenders are Invited for the Servicing and Issue of Safe Lift Certificate for 19 Vehicle Lift Hoist 2018-12-14 11:00 CSQ12181507
Supply and delivery of heavy duty mobile vehicle 55 metre aerial firefighting/rescue turntable ladder for the fire and rescue services 2019-02-11 10:00 204G/2018/19
Supply and delivery of various articles of human protective clothing for use in structural fires by the fire and rescue service 2019-02-11 10:00 202G/2018/19
The supply of aerial support to the fire and rescue service during high fire season 2019-02-12 10:00 207G/2018/19
Supply and delivery of various firefighting foam concentrate for the City of Cape Town 2019-02-12 10:00 205G/2018/19

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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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