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 for the Karoo Walking Trails Signage and Mapping 2020-03-13 11:00 DEDaT 0005/ 2019
Appointment of a Service Provider to Develop The Mountain Bike Trails For Mcgregor Musuem in the Northern Cape 2020-03-13 11:00 DEDaT 0006/ 2019
Provision of Open Source Learner Management Service for a period of 36 Months 2020-03-06 11:00 NEMISA/ 2019/ LMSRFB010
The Appointment of a service provider to conduct a feasibility study towards the development of a monumental flag and flag pole. 2020-03-13 11:00 DAC 14/ 19- 20
Appointment of service provider to supply and deliver 5 ton truck for Clanso Farmer Production Support Unit (FPSU) located in ward 18,24,27, and 28 in the Umhlathuze Local Municipality within King Cetshwayo District Municipality in the province of Kwazulu-Natal 2020-03-12 11:00 SS- KZN 7/ 1/ 6/ 3 (753) 3T
Appointment of an HR consultancy firm to provide support to the CETA Administrator 2020-03-06 11:00 016- 2019/ 2020
Procurement of alternative accommodation for the Department of Public Enterprises (lettable office space of 12 144.34sqm and 228 parking bays for a period of 5 years) in Pretoria CBD, Arcadia, Hatfield 2020-03-13 11:00 H19/ 015PF
Procurement of alternative accommodation for the Department of Correctional Services - JICS (lettable office space of 497.73sqm and 12 parking bays for a period of 3 years 2020-03-13 11:00 H19/ 016PF
Appointment of a service provider to render technical security maintenance of KZN Legislature’s security systems infrastructure for a period of 36 months 2020-03-16 11:00 KZNL 01/ 2020
ZNT 02975W: KZN: Department of Community Safety and Liaison : Durban West Office: Pinetown: Proposed hire of office accommodation in extent of 242m2 four (04) lock up three (03) under cover and one (01) parking bay for disabled person. 2020-03-20 11:00 ZNT 02975W
Appointment of a Service Provider to Render Cleaning Services for the Housing Development Agency Head Office, 6 – 10 Riveria Office Park, Riviera Road, Killarney 2020-03-13 11:00 HDA/ JHB/ 2019/ 022
ZNT 02976W KZN: Department of Community Safety and Liaison: ILembe District Office: Kwa Dukuza: Proposed hire of office accommodation in extent of 242m2 four (04) lock up three (03) under cover and one (01) parking bay for disabled person. 2020-03-20 11:00 ZNT 02976W
Rendering of Security Services at the Department of Labour, Mt Ayliff Labour Centre for a period of 36 months (3 years). 2020-03-27 11:00 LECS 16/ 2019
Rendering of Security Services at the Department of Labour, Maclear Labour Centre for a period of 36 months (3 years) 2020-03-27 11:00 LECS 10/ 2019
Appointment of a service provider to provide office space on a lease agreement for CCMA Ekurhuleni office within the Benoni and/ Germiston CBD area for a period of five (5) years. 2020-03-13 11:00 CCMA/ 2018/ 38(A)- EKU
Rendering of Security Services at the Department of Labour,Butterworth Labour Centre for a period of 36 months (3 years). 2020-03-27 11:00 LECS 11/ 2019
Rendering of Security Services at the Department of Labour, Lusikisiki Labour Centre, Flagstaff and Bizana Visiting Points for a period of 36 months (3 years). 2020-03-27 11:00 LECS 09/ 2019
Rendering of Security Services at the Department of Labour, Mthatha Labour Centre for a period of 36 months (3 years). 2020-03-27 11:00 LECS 08/ 2019
Limpopo Central Hospital - Supply Of Bulk Services to Site 2020-03-13 11:00 NDOHF 11/ 2019- 2020
Request For suitable office space for SITA Limpopo, Polokwane Office through an operating lease for a period of 5 years 2020-03-13 11:00 RFB 2078- 2019

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