How to Price your Tender

margin of error

Many people ask the question "how must we work out our tender price?", but there is no simple answer, because every tender is different.

One general guide is work out your total cost of executing the job as accurately as possible then play around with the margin.

In general, there are points that must be dealt with when calculating price:

  1. Price is king - ensure you price your product/service as low as possible, to stand a chance at winning a tender.
  2. Be precise, when the unit price is $11.49 then state it in the tender response as that and not as $11.00 or even $12.00. Slight differences like these can amount to large amounts that can be lost, depending on the size of the tender. Rounding to the higher figure could also make your bid less competitive.
  3. Ensure that all the costs of delivering the product/service are taken into consideration; double check your pricing - something small not included can be to your disadvantage.
  4. Confirm prices of goods with your suppliers and discuss time element too. Prices can change very quickly due to increases in fuel prices or exchange rate fluctuations.
  5. Always remember to add Value Added Tax (VAT) and applicable taxes.
  6. Most importantly, never bid too low or too high.
  7. Evaluation Committees are well informed and they will know if a is bid too low or too high;
  8. Bidding too low or too high might lead to a tender response being disqualified or marked as non-responsive.
  9. Pricing can be influenced by law as well.  For instance don’t quote a rate for paying workers that is below the minimum wage guidelines.
  10. Remember that you are going to save on some costs such as advertising, telephone costs if you win the tender. Use these savings to lower your price.