Issue Date: 
Thursday, October 31, 2019

Items that determine tender pricing

By Werner van Rooyen, Director of HowToTender (Pty) Ltd which specializes in tender consulting and tender training.

Many bidders that respond to tenders, struggle when it comes to calculating a price for a specific tender.  One of the reasons for this is that many Small Business Owners are usually new to the tender process and therefore they lack the necessary experience to price their bids correctly.

Without getting into the fundamentals of accounting there are two basic items that determine your tender price.  In fact, these two basic items should always be your guide when determining your price on the goods or services you sell.

The two items that determine pricing is:

  • Direct Cost; and
  • Indirect Cost.
  1. Direct Cost

Direct Cost is the cost that one pays to either:

  • Produce goods or services; or
  • The cost price you pay to procure goods or products that you will resell to your customers.

For instance, if you manufacture wooden chairs your Direct Cost will be the money you spend on purchasing the wood for the chairs.  Other Direct Cost in manufacturing wooden chairs would be wood glue, nails, and labour costs.

Thus, when responding to a tender you must take the utmost care that you include all your Direct Costs in your tender price.

  1. Indirect Cost

Indirect Cost is the expense that you must incur to run your business and these costs do not necessarily generate any income.  Some of the most common Indirect Cost that your business incurs will be:

  • Rent
  • Utility expenses such as electricity and water
  • Telephone
  • Stationery
  • Salaries and wages
  • Accounting fees

It is especially important to include Indirect Cost in your tender price.  Remember that the tender will form part of your normal day-to-day business and therefore it must contribute to your Indirect Cost. 

The question is how to calculate how much of the Indirect Cost is contributable to the tender.  There is not one specific rule but one of the more common rules is to estimate the time spend on servicing the tender and then use that to factor in the Indirect Cost into the tender price.  In other words, if you must spend 50% of your time servicing the tender then 50% of your Indirect Cost should be part of your tender price.

To learn more about this and many other tender conditions attend our “Become a Tender Expert” 2-Day workshops presented in Johannesburg, Pretoria, Durban, Port Elizabeth, and Cape Town.  Book and pay online at https://howtotender.co.za/tender-expert-form/

Contact us at wernervr@howtotender.co.za should you need more information.

You can also purchase a Tender Manual (Handbook) on our website https://howtotender.co.za/ which is a step by step guide how to respond to a South African Tender.  It includes examples of completed SBD forms.

Title Closing Date Tender No.
Training of 23 EPWP participants on Occupational Certificate: Health Promotion Officer: SAQA ID 94597: NQF Level 3: QCTO Learnership Registration Number 11Q110030001633 in Gert Sibande District Municipality: Project Name: Isiphephelo HBC 2020-09-01 11:00 HP20/ 003GS
Training of 25 expanded public works programme (EPWP) participants on Further Education and Training Certificate: Child and Youth Care Work: SAQA ID: 60209: NQF level 4: HWSETA learnership registration number: 11Q110014351554 in Capricorn District Municipality: Bakone HCBC 2020-09-01 11:00 HP20/ 002GS
Training of 25 EPWP participants on Further Education and Training Certificate: Child and Youth Care Work: SAQA ID 60209: NQF Level 4: HWSETA Learnership Registration Number: 11Q110014351554 in West Rand District Municipality. 2020-09-01 11:00 HP20/ 005GS
Training of 20 expanded public works programme (EPWP) participants on National Certificate: general security practice: SAQA ID: 58577: NQF level 3: SASSETA learnership registration number: 29Q290038431243 in Garden Route District Municipality: Law Enforcement 2020-09-01 11:00 HP20/ 004GS
Provision of haemodialysis services to selected institutions in Kwazulu-Natal Department of Health: 3 year contract. 2020-09-02 11:00 ZNB 5284/ 2020- H
The objective of this Terms of Reference (TOR) is to outline the scope of work for the provision of the MPLS services for CATHSSETA. 2020-08-31 11:00 CATHS/ MPLS/ 021/ 2020
The objective of this bid is to appoint a panel of three (3) Legal and Compliance Experts to assist CATHSSETA with legal matters and ancillary related services. 2020-08-31 11:00 CATHS/ PLCE/ 024/ 2020
The NEF herewith invites potential service providers to submit proposals for the provision of Reliable and Secured Internet Connectivity. 2020-09-01 15:00 RFP: NEF 02/2020/21: (Provision of Reliable and Secured Internet Connectivity)
Procurement Of Supply, Installation, Configuration, Maintenance And Support For NGN Edge Routers, Servers And Peripherals For The National Department Of Labour For The Period Of Five (5) Years. 2020-08-28 11:00 RFB 2217/ 2020
Provide Enterprise Content Management (ECM) Implementation Services for KZN COGTA including Maintenance and Support for a period of three (3) years. 2020-08-28 11:00 RFB 2171/ 2020
Provision of Vulnerability Management Solution with support for the Department of Defence (DOD) for a period of thirty-six (36) month 2020-09-04 11:00 RFB 2200/ 2020
Provision of health and hygiene packages to ECD centres in the Northern Cape Province 2020-08-14 11:00 NC/ SOC/ 007/ 2020
Provision of personal protective equipment (PPEs) for soup kitchens and nutrition centres in NC 2. 2020-08-14 11:00 NC/ SOC/ 008/ 2020
Panel of Three (3) Suppliers for Maintenance/Services and Repairs on Fleet (Trucks, Cars and LDV`s) for Two (2) Years 2020-09-07 12:00 GTLM/INFR17/2020/2021
Supply and Delivery of 500PPM Farm Grade Diesel Fuel for Onrus caravan Park for a contract period ending 30 June 2023 2020-09-11 12:00 SC 2110/2020
Supply and Delivery of 3-Ton Truck with a Canopy 2020-08-21 12:00 GTLM/INFR22/2020/2021
Supply and Delivery of Two Double Cab LDV (4X2) 2020-08-21 12:00 GTLM/INFR23/2020/2021
Planning, Design, Construction Monitoring, Construction and Close Out (Turnkey) of Rooiwal Access Road 2020-09-07 12:00 GTLM/INFR18/2020/2021
Quotation for Wireless Project 2020-08-14 11:00 KCDM/Quote/48/2020
As and When Electrical and Refrigeration Contract for East London 2020-08-15 16:00 ECR/08/08/2020

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