One of the most important and challenging tasks during your tender response process will be in pricing the tender (pricing the bid). As to what the price should be, there is no straight answer because every tender is different. Below are some pricing strategies to help you get started.When it comes to the price you want to put forward, only you and your team in the business will know what a winning price looks like. As the owner or employee of the business, you will have more knowledge than any tender writing expert, on your business's operating costs, competitors and cost structure.
Here are a few helpful tips to help you understand the most important issues when it comes to price.
1. Direct Costs are the specific costs incurred to provide the product or service e.g. staff, materials / sub-contractors and supervision
Indirect costs are often the hardest to breakdown especially if there are multiple items on the tender to price. Showing one percentage of the true breakdown is impossible as it will not accurately represent a break down of different prices.
Tip: take a look at the average over the contract then do a sense-check compared to your company accounts and pricing calculations.
If your breakdowns are reasonable and realistic representations of your price then you should be able to confidently expand on these if challenged.
Keep your competitors in mind
Tips for Pricing Tenders
Pricing response criteria
To put it simply, if the tender request is asking too much of your business or if you don't think you can win it - don't waste your time and effort responding to it.
Highlight any added value that comes with your price, even if it's something simple. Let the tendering company know the value and benefits of your business compared to your competitors, this could be in the form of a one hour free consultation for a building and construction business or a bonus window cleaning for a cleaning business.
Be aware of price changes
It’s important to check if the pricing is required to include or exclude GST. It's may seem like a simple thing to overlook but getting this wrong could lose you the bid because your pricing is 10% higher than you meant. On the other hand, you could win the bid and instantly lose 10% of your profit margin. Ouch.