Learn how to price your tender response in Australia with strategies to stay competitive, cover costs, and highlight your value to buyers.Pricing a tender response is often one of the most complex and critical stages of the tendering process. 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.
Understanding the Key Elements of Pricing a Tender
There are three primary components that make up your tender price:
How to Calculate Direct and Indirect Costs
Direct Costs
Think about the nature of your business, if it, and your product is quite simple, it should be rather easy to calculate a breakdown. Use your existing estimating tools or refer to past financials or project data.
Indirect Costs
Indirect costs are often the hardest to break down, 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 breakdown of different prices. Try averaging indirect expenses across the life of 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.
Pricing Competitively While Maintaining Profit
While pricing low can win attention, competing only on price can damage your margins and long-term sustainability. Instead:
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Understand the buyer's evaluation criteria.
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Highlight your value-adds (e.g. local knowledge, efficiency, included extras).
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Benchmark your pricing against competitors while justifying any higher costs with benefits.
Remember, buyers are often willing to pay more for better value.
Tips for Pricing Tenders
1. Read the Pricing Requirements Carefully
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Hourly rates
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Labour and material breakdowns
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Subcontractor costs
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Fixed or variable pricing
If your pricing doesn’t align with the response criteria, your bid may be deemed non-compliant.
2. Ensure the Tender is a Good Fit
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. Take time to conduct a thorough go/no go process before commiting to ensure the tender is a good fit for you business.3. Clearly Communicate Your Value
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Free consultations
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Ongoing support
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Faster delivery times
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Sustainable or local sourcing practices
4. Break Down Your Pricing Clearly
Some tender response schedules are not always clear. It may be that the tender issuer doesn’t really understand the business you're in, or it may be an error, so it’s always a good idea to clarify anything that doesn't make sense. Make sure you explain anything that the price depends on.
5. Be Aware of Price Changes
6. Be Clear About GST
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.Final Thoughts on Tender Pricing in Australia
Pricing is about more than just numbers. It's about communicating the value, credibility, and trustworthiness of your business. With increasing emphasis on value-for-money in Australian procurement, demonstrating how your pricing reflects quality outcomes will make your response more compelling.
Need help pricing your next tender response? Visit our Resources Hub for tools, templates, and detailed guides to help you prepare competitive, compliant, and compelling submissions for tenders across Australia.
