Most SMEs lose tenders for one of two reasons: they price too high and lose on points, or they price too low and fail to deliver. A strong pricing model prevents both.
This guide gives you a repeatable pricing framework for South African government tenders—built for profit, compliance, and higher win rates.
Start with the evaluation model
Before you calculate any numbers, confirm the evaluation split. If you haven’t already, read how tenders are evaluated. Your price is only part of the score.
The 6-layer pricing model
- Direct costs: Materials, labor, subcontractors.
- Indirect costs: Admin, finance, compliance, insurance.
- Logistics: Delivery, storage, fuel volatility.
- Risk buffer: Inflation, delays, penalties.
- Margin: Sustainable profit that protects delivery quality.
- Compliance costs: Certificates, audits, verification.
Pricing tactics that still win
- Segment the bill of quantities: Price high-risk items with better buffers, keep standard items competitive.
- Use price bands: Benchmark against past awards or market averages.
- Functionality-first: If your technical score is strong, you can price higher without losing.
Common pricing mistakes to avoid
- Underquoting to “win the work,” then cutting corners and damaging references.
- Ignoring compliance costs like tax clearance renewals or B-BBEE verification.
- Pricing without checking the mandatory document list—see the compliance checklist.
Proof matters
Attach a clear pricing breakdown. Municipal and provincial panels appreciate transparent costing, especially for services and maintenance contracts.
Need a deeper dive? Start with this competitive pricing guide and use it to benchmark your model.
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