How to Price a Government Tender (Without Losing Money)
How tender pricing is actually scored in South Africa, how to build a cost base that survives late payment, and why the lowest price does not always win.
Price too high and you lose on points. Price too low and you win a contract that loses you money — or gets queried as abnormally low. Pricing a government tender well is its own skill, and it starts with understanding how price is actually scored.
How price points work
On the 80/20 system, price is worth 80 points and is scored relative to the lowest acceptable bid — the lowest bid gets the full 80, others get proportionally less. B-BBEE preference points (up to 20) are added on top. So a competitor with a better B-BBEE level can beat you while charging slightly more. You are pricing against points, not just against rands.
Build a cost base that survives reality
- Direct costs: materials, labour, equipment, transport
- Compliance and bid costs: certificates, bonds, the time to prepare
- The finance cost of late payment — if you will wait 60–120 days for cash
- A real margin — not what is left over, but what you set deliberately
Beware the abnormally low bid
Organs of state can query or reject a bid that is abnormally low — priced so far below the others that delivery looks implausible. Winning on a price you cannot deliver at helps no one: you carry the loss, or you fail and damage your record. Price to deliver, not just to win.
Make the bid/no-bid call on the numbers
If the only way to win is to price below your real cost, that is a no-bid. Disciplined pricing — and the discipline to walk away — is what separates contractors who grow from those who win busily and go under quietly.
Frequently asked questions
How are price points calculated on a tender?+
On the 80/20 system, the lowest acceptable bid scores the full 80 price points and others score proportionally less; B-BBEE preference points (up to 20) are added on top. Over R50M it is 90/10.
Does the lowest price always win a government tender?+
No. Price is combined with B-BBEE preference points (and functionality where used), so a higher-priced bid with a better B-BBEE level or stronger quality score can win.
What is an abnormally low bid?+
A price so far below the other bids that the buyer doubts you can deliver. Organs of state may query or reject abnormally low bids, so pricing to deliver matters more than simply being cheapest.
Should I include the cost of late payment in my price?+
Yes. If the buyer typically pays in 60–120 days and you will finance delivery, build that finance cost into your price before submitting — not after you win.
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