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.
Request for Expressions of Interest: Roster for international consultant for country review mission – socio-economic development (SED) 2021-07-07 11:00 EOI APRM/CRM/AUC/SED / 02/2021
Request for Expressions of Interest: Roster for international consultant for country review mission– democracy and political governance (DPG) 2021-07-07 11:00 EOI APRM/CRM/AUC/DPG/ 01/2021
Request for Expressions of Interest: Consultancy Services to Operationalize and Conduct Trainings on the Use of Digital Platform 2021-07-02 15:00 AUC/IED/C/005
Supply and Delivery of Electrical Consumption Meters and Related Hardware and Equipment 2021-06-25 12:00 TDR192/2020/2021
Supply and Delivery of Passive Ambient Air Quality Equipment and Analysis Services 2021-07-02 12:00 TDR196/2020/2021
Professional Service Providers For The Mossel Bay Municipal Contractor Development Programme 2021-07-16 12:00 TDR186/2020/2021
Supply and delivery of Personal Protective clothing (PPE) for the Mossel Bay Municipality for a period ending 30 June 2022. 2021-07-16 12:00 TDR189/2020/2021
Erection Of A Billboard: Hartenbos 2021-07-23 12:00 TDR200/2020/2021
Renting of Commercial Outdoor Advertising Space For Billboards In Mossel Bay On Municipal Property 2021-07-23 12:00 TDR202/2020/2021
Supply, Delivery And Installation Of Fire Fighting Equipment And Services 2021-07-23 12:00 TDR201/2020/2021
Proposal For The Appointment Of A Panel Of Service Providers For Fundraising 2021-07-09 12:00 SCM 81 OF 2020/2021
Supply and Installation of a Vehicle Monitoring, Tracking and Recovery System 2021-07-15 12:00 SCM 71 OF 20/21
Supply and Deliver Cleaning Material for The Period 1 July 2021 To 31 December 2021 2021-06-25 12:00 Q001/2022
Supply and Deliver Workshop Material for the Period 1 July 2021 To 31 December 2021 2021-06-25 12:00 Q002/2022
Supply and Delivery of Electrical Material For The Period 1 July 2021 To 31 December 2021 2021-06-25 12:00 Q003/2022
Supply and Deliver Household And Consumer Connections Plumbing Material for the Period 01 July 2021 to 31 December 2021 2021-06-25 12:00 Q004/2022
Printing Services For Saldanha Bay Municipality For The Period From 01 July 2021 – 31 December 2021 2021-06-29 12:00 Q005/2022
Supply and Delivery Of Hardware Material For Saldanha Bay Municipality for The Period From 01 July 2021 – 31 December 2021 2021-06-29 12:00 Q006/2022
Supply and Delivery of Hand Sanitizer For Saldanha Bay Municipality For The Period From 01 July 2021 – 31 December 2021 2021-06-29 12:00 Q007/2022
Supply and Delivery of Office Furniture For Saldanha Bay Municipality. 2021-06-25 12:00 SBM 63/20/21

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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