Obviously your pricing of a tender will be different to your normal pricing strategy. The first point to remember is that a scale made through the tendering process can have very good margins and that non related costs such as the advertising, marketing and allowance for bad debts should not be included in the pricing.
People who talk about the tendering market being competitive are often using their general list price levels in their tender, which usually have these additional costs built in.
The only real marketing cost associated to a tender is the preparation of the tender response itself and in many cases the bulk of this can be standardized.
Pricing the Services
Where a service is being offered, a similar technique to product pricing can be determined if the service is broken down into clear units. For example, tiling can be broken down to a square meter price. If your current pricing schedule for service is not clearly defined to units, it could be a very worth while exercise to calculate these figures to get a better indication of what profits are really being made when selling to the general public. If you are serious about tendering your pricing will need to be very accurate. It would not be ideal to win a tender to find out it was not profitable.
If you have any doubts about your current pricing structure and future tender pricing structure, a cost accounting firm is going to be an excellent resource to use.
Remember, once your tender price is clearly established, it can be constantly reused to respond to several tenders.
Tips on Pricing
It is important to consider some guidelines when preparing your tender price.They include:
Always submit your lowest possible price for the service. If you wish to provide additional services then offer separate price for the extra service.
Your price should make you a reasonable profit. You may in some tender decide to reduce your margin and break even. You may even make a small loss if you have other objectives. These could be to keep a team together during difficult times, or using the project simply for marketing purposes. Be careful about putting in loss making tenders. The costs may not be worth the risk.
Aim to meet or exceed your client’s price objectives. That is, try to submit a lower price than your client expects. You may even try to do the job in less time, or do it faster, or with fewer resources than your client expects.
Try to avoid a single fixed price. This may b difficult particularly if the client has included a price schedule that requires a single fixed price. You should then include a price menu that details prices under various conditions.
Ensure the price of cost schedule has been completed against all items for which you wish to tender.
If you are dealing with a product, which is exceptionally good or difficult to maintain for the period of warranty, take care of margin before giving your required price.
All rates should be quoted in English, both in figures as well as in words in the schedule of rates in such a way that manipulation is not possible…[Read More]