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, 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
Cleaning of Ash Spillage at Hendrina Power Station and surrounding areas and Cooling Towers Offline Maintenance 2018-02-26 10:00 MPGXC005000
Supply Various electrical goods 2018-01-25 11:00 GH11800359
Supply: Pole boxes, spreaders & stay guards 2018-01-25 11:00 GH11800360
Horticultural maintenance i.e. litter picking, cleaning etc. on Public Parks and Public Open Spaces in Ward 13 in Delft 2018-02-05 14:00 SN11800519
Mole control in Delft area 2018-02-05 14:00 SN11800520
Taxi/Shutttle services Constantia Nek WTP 2018-01-25 09:00 WJ11800304
Hiring of 3 x 10 000L Water Tanker Trucks for 60 days 2018-01-25 09:00 WJ11800305
Quotes : Repairs on Skip Bin Trailer NDH 1962. 2018-01-30 12:00 RFQ / 352
Tender for the supply, delivery and off-loading of a test bench for energy meters, as and when required: three-year period. 2018-02-20 10:00 USD EE 33-2017/18
Appointment of a Professional Service Provider to Establish Transport and Urban Development Authority's Carbon Footprint 2018-02-20 10:00 220C/2017/18
Request for quotation for supply and delivery of oils and lubricants for the fleetworkshop of Oudtshoorn Municipality (period of 12 months) 2018-01-30 12:00 SCM 05/2018
Construction of a Permanent 11KV Switching Station at Thornhill (Multi Year Project) 2018-02-20 10:00 PM89/2017
Supply and Delivery of 60000x 40 Micron Bin Bags Packed in 20’s A Bailer. Colour: Black 2018-01-29 12:00 RFQ / 349
New Township Development (Water & Sewer Reticulation in PLK EXT 126 & 127) 2018-02-20 10:00 PM19/2017
Supply and Delivery of 2000x30kg Bags of Coldmix and 2x200 Litres of Prime. 2018-01-29 12:00 RFQ / 350
Construction of Kanana New, Police Station: North West Province 2018-02-20 11:00 19/1/9/1/142TB(17)
Appointment of Service provider to supply, Deliver, Install and Maintenance of wireless network connectivity for a period of three years. 2018-02-22 10:00 PM136/2017
Repair 32x Streetlights On R621 Towards Dundee and Convert Them Into Led. 2018-01-30 12:00 RFQ / 351

Pages

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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