How to Price Your Tender Competitively
Pricing is an art. Too high, you lose. Too low, you go bankrupt. We break down the cost-plus vs. market-based pricing models for tenders.
The Winner's Curse
There is a phenomenon in auctions called the 'Winner's Curse'. The person who wins the auction is often the one who overestimated the value (or underestimated the cost). Winning a tender at a loss is worse than losing a tender. You are now legally bound to deliver a project that will bankrupt you.
Cost-Plus vs. Market-Based
Most SMEs use 'Cost-Plus': My cost is R100, I want R20 profit, so I charge R120. This is safe but sometimes leaves money on the table.
'Market-Based' pricing is risky but lucrative: My cost is R100, but I know the market rate is R150. I charge R145 to undercut slightly but make R45 profit. To do this, you need market intelligence.
Use the Estimator
Our Value Estimator helps you build your price from the bottom up. It reminds you to include commonly forgotten costs like 'Performance Guarantees' and 'Insurance', ensuring you don't bid below your break-even point.
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How to Price Your Tender Competitively
Pricing is an art. Too high, you lose. Too low, you go bankrupt. We break down the cost-plus vs. market-based pricing models for tenders.