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
REQUEST FOR PROPOSAL FOR THE APPOINTMENT OF A TERMINAL OPERATOR TO FINANCE, OPERATE, MAINTAIN, REFURBISH, AND/OR CONSTRUCT AND TRANSFER A BREAK-BULK TERMINAL SPECIALIZING IN COLD STORAGE OF FISH AND FISH-RELATED PRODUCTS FOR A TEN (10)-YEAR CONCESSION PERIOD AT THE PORT OF CAPE TOWN.
Appointment of a Service Provider to recruit and deliver Learnership training for the National Certificate in Banking (NQF 5) for the Small Enterprise Development and Finance Agency (Sedfa)
The Alexkor RMC Joint Venture (JV) invites suitably qualified and experienced service providers to submit quotations for the training of Managers and Finance Team members on critical governance, compliance, and accountability requirements in terms of the Public Finance Management Act, 1999 (Act No. 1 of 1999), as amended, and applicable Treasury Regulations. The purpose of the training is to strengthen financial management capacity, enhance compliance, mitigate financial risks, and ensure sound governance within the Joint Venture.
REQUEST FOR QUOTAION: SUPPLY, DELIVERY AND ISTALLATION OF WATER PRESSURE PUMP FOR FINANCE HOUSE (56-58) PAUL KRUGER STREET
SUPPLY, INSTALLATION AND UPGRADING OF NEW COUNTERS AT VEHICLE LICENSING AND FINANCE DEPARTMENT MAIN BUILDING
PROPOSAL OF FINANCE FACILITY OF R6 050 000 OVER PERIOD OF 60 MONTHS
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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.