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.
Appointment of a service provider to maintain, enhance and hosting of website for Robben Island Museum (RIM) for a period of thirty-six (36) months 2020-02-14 11:00 RIM ICT 03- 2019/ 2020
The South African National Roads Agency SOC Limited (SANRAL) invites tenders for the improvement on National Route N2 Sections 14 and 15 from Green River (km 60) to Buffalo River bridge (km 3.2). 2020-02-14 14:00 SANRAL N.002- 145- 2012/ 1
The Road Accident Fund (RAF) requires rental of office space for the RAF Cape Town Branch for a period of nine (9) years and eleven (11) months. 2020-02-21 11:00 RAF/ 2019/ 00028
Appointment of a service provider to conduct Environmental impact assessment and Township establishment for Gauteng Industrial Development Zone (GIDZ) Springs SEZ 2020-02-10 11:00 GIDZ/ 07/ 2019- 20/ SPRINGSSEZ
Appointment of a service provider to procure, implement, commission and support hardware/ kiosk for self-service ticket sales for Robben Island Museum (RIM) for a period of thirty-six (36) months 2020-02-21 11:00 RIM ICT 02- 2019/ 2020
Appointment of a service provider to procure, implement, commission and support queue management system (QMS) for Robben Island Museum (RIM) for a period of thirty-six (36) months 2020-02-17 11:00 RIM ICT 04- 2019/ 2020
Request for informtaion (RFI) for the purpose of identifying vendors who have the capacity and experience to provide an options assessment and feasibility study for facilities management services to the Gauteng Industrial Development Zone SOC limited for the operations of the OR Tambo international Airport Special Economic Zone Precinct 1 2020-02-07 11:00 GIDZ/ 08/ 2019- 20/ RFI_FM
Terms of reference for a third party to enter into a lease agreement with Robben Island Museum to manage curio shops located at Murray’s Bay harbour on Robben Island and the Nelson Mandela Gateway at the V&A Waterfront on a lease basis for a period of two (2) years with an option to extend for another two (2) years 2020-02-18 11:00 RIM MAR 01- 2019/ 2020
Appointment of a service provider to do Design and installation of perimeter clear fence for Gauteng Industrial Development Zone (GIDZ) ORTIA SEZ Precinct 2 2020-02-07 11:00 GIDZ/ 05/ 2019- 20/ FENCEP2
Appointment of a service provider to conduct Environmental impact assessment and Township establishment for Gauteng Industrial Development Zone (GIDZ) ORTIA SEZ Precinct 2 2020-02-10 11:00 GIDZ/ 06/ 2019- 20/ ORTIASEZP1
DTPC therefore invites, suitably experienced and qualified, Service Providers to send proposals for the provision of services to remove the existing lagging and supply, install and warrant the new installation as a turnkey project 2020-02-10 11:00 DTP/ RFP/ 18/ AGZ/ 09/ 2019
Terms of reference for the appointment of a service provider to provide communication, public relations and marketing services to Robben Island Museum for a period of three (3) years 2020-02-19 11:00 RIM MAR 02- 2019/ 2020
Manenberg: Manenberg Primary School: Construction of a new School 2020-02-18 11:00 S065/ 19
Welkom Department of Mineral Resources: Alternative Office accommodation and parking facilities for 9 years and 11 Months 2817.88m² and 50 bays 2020-02-11 11:00 BL20/ 001
HANOVER: MAGISTRATE OFFICE: Installation and replacement of air conditioners 2020-01-31 11:00 CW08/ 20
HARSTWATER: MAGISTRATE OFFICE: Installation and replacement of air conditioners 2020-01-31 11:00 CW07/ 20
NOUPOORT: MAGISTRATE OFFICE: Installation and replacement of air conditioners 2020-01-31 11:00 CW05/ 20
DOUGLAS: MAGISTRATE OFFICE: Installation and replacement of air conditioners 2020-01-31 11:00 CW06/ 20
Supply, delivery, installation and commissioning of PMC non-return isolating valves, flow meters and pipe fittings at Phalaborwa Plant CIDB Grading OF 6ME 2020-02-19 11:00 LNW 31/ 18/ 19- Re Advert
Appointment of Brand Agency for World EXPO 2020, Dubai 2020-02-07 11:00 BSA/ 003/ 2019

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