If you provide goods or services to other businesses or the public sector, you may have to compete for contracts by submitting a tender. Although value for money can be an important component of many tenders, the way you price your bid can also make the difference between winning or losing business.
Although price is important, there are many other factors that your potential customer may be looking for, from your ability to meet their operational needs to your environmental credentials. The more you can find out in advance about their requirements, the better you can tailor your tender accordingly.
As with quotations, you're committed to the price you submit in a tender if it is accepted.
Before you price a tender, check the instructions in your client's bid specification. These will usually detail how the costs should be displayed so that bids are easier to compare.
You may be asked to provide:
- a breakdown of component costs at each stage of the project - eg weekly or monthly
- staff time and costs
- management time and costs
- administration time and costs
- estimates of reimbursable expenses
Even if a detailed breakdown isn't asked for, it's in your interest to provide one. It can help you to win contracts by showing your client you're offering good value. For more advice on how to price contracts, see win contracts at the right price.
In your tender document, your overall price should be set out in both words and figures. It should be clear which currency you are dealing in and whether your price includes VAT.
You should also state how long your prices will be valid for. It can sometimes take a long time for tender decisions to be made - by which time your costs may have increased.
It is a good idea to add a contingency for any unexpected costs or additional work that may arise. Explain where and why you have included this in your bid.
Know your legal responsibilities
- Do you need a licence?
- Get the right business insurance
- Comply with the law when providing goods and services
- Know your customers' rights
- Distance and online selling rules
- Understand pricing legislation
- Buying goods from outside NI
- Selling goods outside NI
- GDPR compliance checklist
- Pay your business rates
- Understand staff contracts and your responsibilities
- Taking on contractors and subcontractors
- What you need to do about health and safety
- Know your legal obligations on pensions
Understand tax and VAT
Sell and market your products or services