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.
Betterment and Regravelling on District Road D1575 between Chainage 0.00km to 1.50km in the Ndwedwe Local Municipality for Grade 3CE Vukuzakhe Contractors 2018-11-20 11:00 ZNT373T/ 3/ C2930/ 017/ S/ 1/ 2018- 2019
Firearm safe - wall mounted 2018-10-30 11:00 PSH 783/ 1819
The Drain Clearing and Verge Maintenance On P2-3 From Km 7.567 To Km 38.056 in the Mandeni Local Municipality (Kz291) For Grade 3CE/SH Vukuzakhe Contractors 2018-11-22 11:00 ZNT 373T/ 3/ C2910/ 049/ S/ 1/ 2018- 2019
Folding white cane 2018-10-30 11:00 PSH 711/ 1819
The Betterment, Regravelling and Drainage on D1525 From Km 0.00 To Km 4.00 in the Maphumulo Local Municipality (KZ294) For Grade 3CE Vukuzakhe Contractors. 2018-11-22 11:00 ZNT 373T/ 3/ C2940/ 007/ S/ 1/ 2018- 2019
The Appointment of a Structural Engineer to Assess the Structural Integrity of Roofs for the Rooftop Solar Project. 2018-11-09 11:00 GT/ GIFA/ 146/ 2018
The Construction Of Sidewalks On D893 From Km 0.80 To Km 1.10 In The Maphumulo Local Municipality (Kz294) Contract 2 For Grade 2CE Vukuzakhe Contractors 2018-11-22 11:00 ZNT 373T/ 2/ C2940/ 186/ S/ 1/ 2018- 2019
Invitation for open tender for the development of a Transport Masterplan for the 7157ha of the Tshwane Automotive City in Rosslyn. 2018-11-13 11:00 AIDC T07/ 2018
The Betterment, Regravelling and Drainage On D881 From Km 0.00 To Km 6.00 In The Maphumulo Local Municipality (Kz294) For GRADE 3CE Vukuzakhe Contractors. 2018-11-22 11:00 ZNT 373T/ 3/ C2940/ 004/ S/ 1/ 2018- 2019
The Betterment, Regravelling And Drainage On P224 From Km 0.000 To Km 4.386 In The Mandeni Local Municipality (Kz291) For Grade 3CE Vukuzakhe Contractors. 2018-11-22 11:00 ZNT 373T/ 3/ C2910/ 008/ S/ 1/ 2018- 2019
The Construction of Sidewalks on D894 From Km 1.00 To Km 1.30 in the Maphumulo Local Municipality (KZ294) for Grade 2CE Vukuzakhe Contractors. 2018-11-22 11:00 ZNT 373T/ 2/ C2940/ 187/ S/ 1/ 2018- 2019
The aim of the project is to undertake a province-wide physical verification of all spaza shops and produce quality reliable data to assist the GEP and Gauteng Department of Economic Development (GDED to make informed decisions pertaining to legal and illegal spaza shops. 2018-11-13 11:00 GEP003/ SPAZASHOPPROJECT/ 18
The Betterment, Regravelling And Drainage On D1632 From Km 4.50 To Km 8.50 In The Maphumulo Local Municipality (KZ294) For Grade 3CE Vukuzakhe Contractors 2018-11-22 11:00 ZNT 373T/ 3/ C2940/ 009/ S/ 1/ 2018- 2019
The Betterment, Regravelling And Drainage On D1527 From Km 4.00 To Km 8.00 In The Maphumulo Local Municipality (Kz294) For Grade 3CE Vukuzakhe Contractors 2018-11-22 11:00 ZNT373T/ 3/ C2940/ 002/ S/ 1/ 2018- 2019
The Betterment, Regravelling and Drainage On P719 From Km 4.00 To Km 8.00 in the Mandeni Local Municipality (Kz291) For GRADE 3CE Vukuzakhe Contractors. 2018-11-22 11:00 ZNT 373T/ 3/ C2910/ 006/ S/ 1/ 2018- 2019
Development test of visual perception -third edition 2018-10-30 11:00 PSH 492/ 1819
The Betterment, Regravelling and Drainage On L2450 From Km 0.00 To Km 6.00 in the Mandeni Local Municipality (Kz291) For Grade 3CE Vukuzakhe Contractors 2018-11-22 11:00 ZNT373T/ 3/ C2910/ 003/ S/ 1/ 2018- 2019
The Betterment, Regravelling and Drainage On D1632 From Km 0.00 To Km 4.50 in the Maphumulo Local Municipality (KZ294) For Grade 3CE Vukuzakhe Contractors 2018-11-22 11:00 ZNT 373T/ 3/ C2940/ 005/ S/ 1/ 2018- 2019
Provision of accredited training, establish SMME’s & Cooperatives, provide job readiness and training. 2018-11-13 11:00 GEP005/ YOUTHYMPO18
Aspirating tube. Size: 8ml. 2018-10-30 11:00 PSH 961/ 1819

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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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