As part of our tender consultancy service, I often discuss tender pricing strategies with clients. This beginners guide to pricing tenders covers the most common topics we talk about when aiming for the winning bid.
You know your business, its costs, competitive pricing and your competition – if you don’t, act now! I cannot tell you what will be the winning price. But this guide to pricing tenders explains some the most important issues when bidding to win a tender.
General Pricing Strategy
Tenders almost always have price as part of their evaluation (see MEAT below). So, you must ensure that your company’s pricing is competitive in your market sector.
When undertaking a sales and marketing review with a client, pricing strategies are always on the agenda (part of the Marketing Mix). This is a much bigger topic than pricing tenders and is too broad to cover properly in this post but let’s look at some of the basics:
There are three elements to a price:
- Direct Costs are the specific costs incurred to provide the product or service e.g. staff, materials / sub-contractors and supervision
- Indirect Costs include premises, management, professional fees, administration etc.
- Profit is the difference between the selling price and (1) & (2)