Everything you need to learn how to win tenders with the right pricing strategy
Do you want to know how to win tenders with the right pricing strategy?
Your pricing strategy is a key part of your tender submission. Buyers are seeking the most economically advantageous tender (MEAT), so your pricing can determine whether you win the bid. How can you ensure that your pricing strategy will win you the tender?
Keep reading to find out how to win tenders with the right pricing strategy.
What do you need to know about pricing strategies?
Generally, tenders will include pricing as part of their evaluation criteria. To be in with a chance of winning the bid, your pricing needs to be in your sector.
There are three aspects to consider when pricing your goods and services:
- Direct costs – these are the costs associated with providing the product or service (e.g. materials).
- Indirect costs – these are any additional costs, such as premises and administration fees.
- Profit – this is the difference between the selling price and the direct/indirect costs.
To learn how to win tenders with the right pricing strategy, you need to understand the different strategies out there. Here are some examples of different pricing strategies:
Cost-plus pricing is a very common pricing strategy. You consider all costs (direct and indirect), then add your margin (percentage mark-up) to produce a selling price.
You can use this price as a starting point for pricing bids and tenders.
With value-based pricing, you price your products and services in line with what your customers are willing to pay. This is also a useful strategy for pricing tenders. However, you may find that the value-based price is too low. If that should happen, you should review your costs and overheads.
Economies of scale
Economies of scale is a pricing strategy most commonly used in mass operations. The more your company produces, the more you can lower your costs. This is important to consider if you want to learn how to win tenders with the right pricing strategy. For longer contracts, you might be able to reduce your pricing, which could sway the result in your favour.
Most Economically Advantageous Tender (MEAT)
To understand how to win tenders with the right pricing strategy, you need to learn what buyers are looking for.
As we’ve already discussed, buyers are searching for the most economically advantageous tender. This strategy is also called MEAT.
When buyers use MEAT to find a supplier, they’re looking for a combination of price and quality. This could include:
- The lowest price (70% price and 30% quality)
- The highest quality (30% price and 70% quality)
MEAT makes the tendering process fair and transparent. It also ensures that suppliers don’t win the bid on pricing alone.
Pricing your products and services
When you submit your tender response, you need to consider your pricing carefully. Most invitation to tenders (ITTs) state that your pricing is fixed and non-negotiable. This prevents suppliers from offering a low price just to secure the bid.
If you want to change your pricing after winning the bid, your only option is to decline the offer. So, to learn how to win tenders with the right pricing strategy, you should submit a quotation – not an estimate.
To decide on a price for your products and services, it’s crucial that you read the specifications thoroughly and carefully. Your pricing should only cover what’s asked by the buyer. If you include extra costs in your price, you’ll have less chance of winning the bid.
However, there are exceptions to this rule. If the buyer is looking for added value in the evaluation criteria, you may get extra marks for additional costs. This tells the buyer that your products or services are of a high quality.
If you don’t agree with the buyer’s specifications or evaluation criteria, then this tender might not be right for you. This is something to consider when deciding whether to bid or not.
Is it realistic for your business?
To learn how to win tenders with the right pricing strategy, you should consider if it’s realistic for your business.
If you’re unable to meet the buyer’s pricing expectations, you have very little chance of winning the bid. It takes a lot of your company’s time and resources to tender for work. If you can’t win the bid, all of this will simply go to waste.
Need help with a tender?
Hudson Succeed is our bid writing consultancy, offering tender writing services and support to SMEs. Our Bid Writing Team has over 60 years of collective experience and proudly hold an 87% success rate.
Our tender writing services gives organisations of all sizes, at various stages of growth, a chance to succeed with tendering. Hudson Succeed can help if you’re completely new to tendering or aren’t seeing success from your current tendering responses.