Winning tenders isn’t just about submitting the lowest price; it’s about balancing competitiveness with profitability. As a small business owner, you must approach pricing strategically to stand out and still earn a profit. Here’s a simple guide to help you calculate competitive pricing without compromising your business goals.
Step 1: Understand the Scope of Work
Before you even think about numbers, ensure you understand what’s required:
- Read the tender documents carefully. Pay attention to specifications, quantities, and deadlines.
- Ask questions if anything is unclear. Most procurement officials welcome clarity over costly mistakes.
Step 2: Gather Accurate Costs
Competitive pricing starts with knowing your costs inside out:
- Direct costs: Include materials, labor, transportation, and equipment hire.
- Indirect costs: Don’t forget admin expenses, utilities, and storage.
- Hidden costs: Plan for contingencies like fuel price increases or equipment breakdowns.
💡 Pro Tip: Break down costs line by line. Use tools like Excel or a pricing calculator to ensure nothing gets overlooked.
Step 3: Add Your Markup (Strategically)
Your markup is your profit margin, but it must align with industry norms to remain competitive:
- Research what competitors typically charge in your industry.
- Avoid being too greedy—aim for a margin that keeps your price fair and sustainable.
- For tighter margins, ensure your costs are covered and find efficiencies elsewhere.
Step 4: Consider Market Dynamics
Think beyond costs and profits:
- Who are you competing against? Are they large companies with lower overheads?
- What’s the buyer’s priority? Some buyers prioritize value over price; others want the lowest cost.
Step 5: Double-Check Your Numbers
Errors in your pricing can cost you the tender—or worse, your reputation.
- Cross-check your calculations to ensure accuracy.
- Confirm that your total aligns with the required formats in the tender document.
Step 6: Create a Competitive Edge
Your pricing is part of your offer, but don’t forget these value-adding strategies:
- Offer faster delivery times.
- Include after-sales support.
- Highlight your quality certifications or industry experience.
If you need help pricing your Tenders and RfQ’s, check out the Pricing Calculator.