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: Protective clothing 2018-11-19 10:00 GA11900431
Burglar Bars & Security Gate (Joodsekamp Fire Station) 2018-11-14 12:00 B325 /2018/19
Supply, Delivery and Installation of Electrical Fencing at the Klapmuts Multi-Purpose Centre. 2018-11-21 11:00 FQ/SM: 69/19
CCTV inspection of sewer infrastructure. 2018-12-12 10:30 JW 13524 RR
Supply, Delivery and Installation of Burgular Bars with a 100% Local Content at the Klapmuts Mpc and the Groendal Library. 2018-11-21 11:00 FQ/SM : 70/19
Catering of Health Volunteer Handover Ceremony Certificate in Knysna Municipality on the 16 November 2018 2018-11-14 12:00 B326/2018/19
Provision of a 100MBPS fibre layer 2 connectivity to Teraco 2018-11-20 11:00 FQ/SM: 67/19
Catering ward 40 senior citizens. 2018-11-19 12:00 SD11900283
Code: Learner and driver license training and testing for EPWP beneficiaries 2018-11-21 11:00 FQ/SM: 63/19
Disposal and cleaning of Bergzicht Formal Trading 2018-11-21 11:00 FQ/SM: 24/19
Knysna Municipality: Appointment of a Health and Safety Agent for electrification of various areas in the Greater Knysna from Nov 2018 to June 2019 2018-11-15 12:00 201/2018/19
Supply and delivery of concrete bollards 2018-11-21 11:00 FQ/SM: 54/19
Provision of Horticulture and Street Sweeping Services in the Port of Durban including the MSOE for a period of Thirty Six (36) Months. 2019-01-22 10:00 TNPA 719/CIDB
Appointing of Experienced Service Provider to Read Meters Remotely, Via Automated Meter Reading (AMR) System and Manage Metering Services for Large Power Users and Small Scale Embedded Generation Consumers. 2018-12-14 12:00 B/SM 28/19
Supply: Clothing 2018-11-19 10:00 GA11900433
Appointment of Service Providers for Various Training Programmes for a period until June 2021 2018-12-12 12:00 B/SM 24/19
Supply: Protective clothing 2018-11-19 10:00 GA11900434
Rehabilitation and Construction of Stormwater Outlet Structure in Kayamandi, Stellenbosch 2018-12-12 11:00 B/SM 06/19
Supply: 1 each x trans & roll kit m880 2018-11-14 11:00 GM1190371A
Supply: 8 activity unit x supply 316 stainless steel 1/4" ball valve 2018-11-16 15:00 GB11900321

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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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