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 of 20L buckets and 25L Water Cans. 2018-05-04 12:00 GG11801046
Supply: Sport Equipment – Ward 106 2018-05-02 12:00 GG11801014
Supply: Screwdriver - type: flat double insulate 2018-05-02 12:00 GD11801073
Supply: Square shovel 2018-05-02 12:00 GD11801074
Supply and delivery of a vibratory tamping rammer 2018-05-11 14:00 SCM 20/2018
Supply: Ohs jackets 2018-05-09 10:00 GA11800644
Supply E+h pressure transducer 2018-05-02 12:00 GD11801078
Supply Groceries 2018-05-02 15:00 GF11800842
Supply: Groceries 2018-05-03 15:00 GF11800843
Supply and delivery of laptops 2018-05-04 14:00 TN023/2018
Supply, delivery and installation of signage board and name tags for municipal employees for Makhuduthamaga municipality. 2018-04-30 12:00 LIM473/SIGNAGE/17/18/62
Completion of 2017/2018 Internal Audit Plan. 2018-05-16 12:00 IA-PAS-004-2018
Provision of artists to perform at Makhuduthamaga state of municipal address at Jane furse sports ground 2018-04-30 12:00 LIM473/ARTISTS/17/18/61
Compilation of GRAP Compliant asset register. 2018-05-18 12:00 MLM/SCM/11/2018
Appointment of an exploratory and drilling contractor to conduct borehole drilling and water quality tests in Welkom in the Dawid Kruiper Municipal Area 2018-05-04 14:00 TN024/2018
Supply: 4 x Antenna Magnetic Base & whip ( J240ZMC PL), 30 x Fuse Holders IN-LINE 18-0043. 2018-04-26 11:00 2288ZNQFIN-18
Supply and delivery of office furniture. 2018-05-03 12:00 Q12/273 OF 17/18
Supply and Delivery of Tools as per attached list. 2018-05-04 11:00 C71/2017
Supply and Delivery of tools as per attached list. 2018-05-04 11:00 C72/2017
Upgrading of Tshilamba Streets Phase 3. 2018-05-10 11:00 58/2017/2018

Pages

Tender adjudication process

The SBD/WCBD6.1 document must form part of all bids invited.  It contains general information and serves as a claim form for preference points for Broad -Based Black Economic Empowerment (B -BBEE) Status Level of Contribution, and explains how tenders or bids are decided.

The document says:

  • The bidder obtaining the highest number of points will be awarded the contract.
  • Preference points shall be calculated after prices have been brought to a comparative basis.
  • Points scored will be rounded off to two decimal places... Read More
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