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.
Bloemfontein Deeds Office: Maintenance of Fire Protection System 2018-09-11 11:00 BL18/ 039
Ndpw: Security Guarding Services at the Regional Office for 7,9, 10th Floor and D Parking 2018-09-07 11:00 NST18/ 028
Servicing of stand-by generator 2018-08-24 11:00 ZNQ59/ 18/ 19
Appointment of a service provider to provide Information Communication Technology (ICT). 2018-09-17 11:00 FB SETA (17- 18) T0002
Servicing of autoclave machine 2018-08-24 11:00 ZNQ60/ 18/ 19
Witbank Prison Wastewater Treatment Works: 12 Months Operation and Scheduled Maintenance. 2018-09-07 11:00 NST18/ 027
The Financial Intelligence Centre request for proposals from service providers for IT Solution Architecture and Consulting Services for a maximum of thirty six (36) months. 2018-09-07 11:00 FIC/ RFB/ CARA/ 0011/ 2018/ 19
Terms of Reference for the appointment of a service provider for the ETDP SETA’s Business process analysis services. 2018-09-11 11:00 SCMU: 10 - 2018/ 19
Servicing of boiler room 2018-08-24 11:00 ZNQ57/ 18/ 19
Terms of Reference for the appointment of a service provider for a video conferencing solution for the ETDP SETA 2018-09-11 11:00 SCMU: 11 - 2018/ 19
Zonstraal Military Base Oxidation Ponds: 12 Months Operation and Scheduled Maintenance 2018-09-07 11:00 NST18/ 026
N.G Dlukulu clinic, Grahamstown, Makana Local Municipality, Sarah Baartman District: Renovations and Extensions. 2018-09-17 11:00 SCMU3- 18/ 19- 0264- HO
Appointment of experienced and reputable service provider to partner with Tshabo community on snail farming for a period of 24 (twenty-four) months. 2018-09-17 11:00 SCMU 04 - 2018/19:
Middle Terrace and Virginia Shumane Clinics Grahamstown, Makana Local Municipality, Sarah Baartman District: Renovations and Extensions 2018-09-17 11:00 SCMU3- 18/ 19- 0265- HO
Appointment of a Service Provider to Develop and Administer a Consumer Credit Readiness Initiative 2018-09-14 11:00 HS 04/ 2018/ 2019
Dube TradePort invites proposals from suitably qualified, experienced and accredited water testing laboratories to provide water testing services for a period of three (3) years. 2018-09-14 11:00 DTP/ RFP/ 11/ AGZ/ 06/ 2018
False Bay TVET College invites bids for Westlake Site Centre of Specialisation - New Fitting & Turning Training Centre: Repairs & Renovations to Existing Infrastructure 2018-09-07 11:00 FBC T10/ 2018
National Institute for the Humanities and Social Sciences (NIHSS) Invites Suitably Qualified Service Providers to Provide The Insitute with the Office Accomodation 2018-09-24 12:00 NIHSS/ OFFICE- 01/ 2018
Dube TradePort invites proposals from suitably qualified, experienced and independent professional service provider to support the fibre network for a period of three (3) years. 2018-09-14 11:00 DTP/ RFP/ 12/ ICT/ 06/ 2018
DTPC invites proposals from suitably qualified, experienced and independent professional service providers to provide technical services in the acquisition of projects in the Mechanical Engineering and maintenance field for its Bid Specification Committee (BSC) and Bid Evaluation Committee (BEC). 2018-09-14 11:00 DTP/ RFP/ 15/ CEO/ 07/ 2018

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1.    Leading suppliers may not tender

In Australia, for example, government procurement guidelines only allow suppliers who actually tender to be considered for a procurement decision. If the leading supplier or suppliers do not tender, the purchaser can only consider bids from suppliers who do tender. If leading suppliers are not considered, the purchaser may end up buying inferior product or service... Read More

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