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.
Establishment of a list of Registered and experienced service providers for Prequalification to be included in the Department’s Database for provision of Travel Management Services for North West Read for a period of one (1) year. 2018-02-28 11:00 13 READ 0028/2017
Appointment of a service provider to assist with the purchase and delivery of production inputs and poultry for Dr R.S Mompati Poultry Value Chain Project, in Ward 01, 06 and 13 Kagisano Molopo Local Municipality, Dr R.S. Mompati District Municipality in the North West Province. 2018-01-26 11:00 NW-TEN02 (005)17/18
Training: Brush Cutter – Level 2 2018-01-30 12:00 Q28/2017/2018
Appointment of a service provider to supply and deliver production inputs (ground nuts) for Tshidiso Irrigation Primary Cooperative Limited at Greater Taung Local Municipality within Dr. Ruth Segomotsi Mompati in North West Province 2018-01-26 11:00 NW-TEN02 (004)17/18
Supply of Fuel for a period of one year 2018-02-13 12:00 BTO/FOO1/MLM2017
Training: Switch Board Operator 2018-01-30 12:00 Q29/2017/2018
Appointment of a service provider to supply and deliver brick making machine for Kraaipan Bricks & Building Aggregates Primary Cooperative in ward 11 Kraaipan Village, Ratlou Local Municipality within Ngaka Modiri Molema District Municipality in North West Province 2018-01-26 11:00 NW-TEN02 (002)17/18
Revenue Enhancement Strategy 2018-02-13 12:00 MLM/RES/02/2017
Supply and delivery of lifting equipment 2018-02-13 14:00 Rec 58526
Repairs and Maintenance at Monwabesi 2018-02-02 11:00 SB11800536
Supply & Delivery of New Electrical Infrastructure and Construction Equipment for the College 2018-02-16 11:00 C09/2017
Training: computer training level 3 2018-01-30 12:00 Q30/2017/2018
ATM & SSD Acquiring Project 2018-02-16 11:00 RFP -27-2017/18
Appointment of a service provider to supply and deliver sewing machine, leather materials and equipment for Banareng Manufacturing Cooperative in Tlhabane Village within Rustenburg Local Municipality 2018-01-26 11:00 NW-TEN02 (001)17/18
A panel of legal service providers for three year period 2018-02-16 12:00 MTK14/2017
Tender for the supply, delivery and offloading of single -phase and three -phase bidirectional meters, as and when required: three year period 2018-02-19 10:00 USD EE 32-2017/18
Appointment of a suitably qualified Electrical service provider to perform electrical maintenance on PRASA infrastructure on an ‘AS & When’ required basis for Free State and Northern Cape Provinces for a period of 36 months. 2018-02-19 12:00 HO/CRES/SGR/03/01/2018
Supply and installation of eight (8) x tap connected wall mounted deionizers 2018-01-29 12:00 T/ING/001/2018
Supply, installation and commissioning of a pre-reduction furnace. 2018-02-19 12:00 MTK18/2017
Appointment of a service provider to perform a full sans 241:2015 water analysis and sludge classification analysis 2018-01-29 12:00 T/ING/002/2018

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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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