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.
Supply and delivery of drums and cartridges. 2020-12-02 10:00 SCM/NB14/2020/2021
Quotation for the appointment of a service provider for the supply, delivery and installation of a public address (PA) system in the auditorium. 2020-12-03 10:00 Q45-2020-21
Supply and delivery of equipment and materials 2020-12-02 10:00 SCM/NB15/2020/2021
Minor refurbishment of Metrorail mess areas 2020-12-11 11:00 Rfq01/12/11/2020
Provision of Covid-19 Cleaning Services 2021-01-07 12:00 CO 20/28 O
Request for Quotations for the provision of cleaning services for 2 months at Cape Town International Airport 2020-12-10 10:00 RFQ PR 69025 & 69026
Quotation to appoint a service provider for the supply and delivery og bedding for lodging facilities. 2020-12-03 10:00 Q41-2020-21
For the Supply and delivery of 38 Pair Copper Coaxial Cable 2020-12-08 10:00 BLE 3983/2020
Appointment of a PSP for the development of capital expenditure frameworks for four intermediate city municipalities 2020-12-17 23:45 RFP272/2020
Provision for a Panel of Attorneys for Legal Services for a Period of Three Years 2021-01-04 12:00 GTLM/CS05/2020/2021
Invitation | security camera installation 2020-12-11 12:00 No reference number
For the establishment of frame agreements for the supply of non-food commodities 2020-12-13 23:45 ITB/2020/RSA/004
For the establishment of frame agreements for the supply of food commodities 2020-12-13 23:45 ITB/2020/RSA/003
Invitation / Service Providers/Contractors 2020-12-14 16:00 No reference number
Appointment of a service provider for the provision of birds and pest control services for a period of three (3) years at the South African Nursing Council. 2020-12-14 11:30 RFQ 47/2020
For the provision of decontamination services to various buildings in Limpopo, Pretoria and North West for a period of six (06) months 2020-12-03 10:00 ERACAM 5160-34583
For the appointment of an independent consulting service provider to conduct an evaluation and assessment of IT data service towers volumes for a period of three (3) months 2020-12-09 12:00 GSM/20/11/2031
Supply and install program SV 9100VOIP IP PABX system at Merrivale 2020-11-30 11:00 ZNQ001142/00000/00/PMC/GEN/20T
Expression of Interest (EOI): Pre-qualification of Contractors for implementation of optical fibre infrastructure for Ilitha Telecommunications (Pty) Ltd 2020-12-11 12:00 ITC/C1929/2020
Administration and Management of Disaster Management Volunteers (12 Months Contract) Re-advert 2021-01-05 11:00 COMM-D15/2020/2021

Pages

Who is the bidder or his or her representative?

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

In Organ of State tenders, the Standard Bidding Document 4 – Declaration of Inters – ask in paragraph 2.1 the following: “Full name of bidder or his or her representative... Read More

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