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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Based on this article's topics, here are some current tenders that might interest you
LOCAL AUTHORITY NOTICE CITY OF JOHANNESBURG METROPOLITAN MUNICIPALITY In terms of the provisions of section 33 of the Local Government: Municipal Finance Management Act, 2003 (Act No. 56 of 2003), the following Information Statement is hereby made public in relation to the City of Johannesburg Metropolitan Municipality (“CoJ”) appointment of Standard Bank of Southern Africa for commercial banking services.
Establishment of Panel of Service Providers for Finance Management Services for a period of five (5) years.
REQUEST FOR PROPOSALS TO SUPPLY, INSTALL AND CONFIGURE ENTERPRISE WIRED AND WIRELESS LAN INFRASTRUCTURE FOR ITHALA DEVELOPMENT FINANCE CORPORATION
Appointment of suitably experienced and knowledgeable service provider to supply and modify a Microsoft Dynamics 365 Finance System from the date of appointment to 31 March 2030
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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.