Participating in tenders is an effective means of expanding your business. However, the process of completing tender documentation and formulating a tender price quotation can be cumbersome. Hence, your quotation must strike a competitive balance, positioning you well to win the bid and maintain business sustainability. This is when you can foster business growth through engagement in tenders such as Tamil Nadu tenders online, Uttar Pradesh, and other states. Consequently, meticulous attention to these details is imperative for business proprietors.
In numerous tendering processes, submitting the tender price or quotation comes at a later stage.
- Stage one centres on technical considerations.
- Stage two involves creating a tender cost sheet after receiving a quotation request from the buyer (Note: Once submitted, the costing cannot be altered.)
Hence, precision in crafting a quotation is vital. If you’re an MSME or an emerging business owner already acquainted with eTendering processes, this article will keep you abreast of optimal quoting practices. Alternatively, if you’re a first-time tender applicant, this guide on how to formulate a tender price quote will help mitigate calculation errors and enable you to propose a fair bid.
Furthermore, presenting a competitive price within a tender can be a challenging endeavour. When quoting a price for a tender, it’s crucial to account for a range of factors like raw material costs, labour expenses, overheads, and more. Here, in this article, we will explore the various aspects of accurate tender pricing. And will assist you on how to devise a profitable quote that enhances your chances of securing the bid.
In the tendering process, the formal response presented by a supplier to a request for a quotation is termed a quotation. An important distinction is that the quotation encompasses pricing or costs that remain fixed throughout. It does not represent an estimated project value but rather the actual expenses.
The contract is awarded to the most competitive quotation. If you secure an order based on your submitted quotation, the contract will reflect the same amount. Therefore, it’s imperative to thoroughly consider all elements before arriving at a final figure. These may include:
- Quotation isn’t synonymous with tender fees or the Earnest Money Deposit (EMD).
- Quotation serves as an estimate for offered products/services.
- Quotation constitutes a fixed price; once buyer-approved, it remains unchanged.
Calculating tender value from EMD
Earnest Money Deposit (EMD) is a deposit made by bidders to buyers. In case of an unsuccessful bid, the EMD is refunded after the tender process concludes. This deposit can range from 1% to 10% of the estimated tender value.
How to compute tender price?
Deriving a quotation or tender price can be intricate. When aiming to quote for a latest tenders, a multitude of factors need assessment. Below are common factors alongside tender pricing examples to facilitate better comprehension.
Is there a prescribed quotation format?
It’s advantageous to have a ready tender cost sheet format, aiding timely quotation submissions. This format may encompass various components such as:
- Production expenses
- Factory outlays
- Cost per unit
- Aggregate costs
Tips for tender pricing
- Formulate a checklist: Kickstart the quotation preparation by creating a checklist of all required project elements and components. This guarantees comprehensive consideration.
- Strive for mutually beneficial terms: Avoid quoting an unsustainable price, which could harm your business. If a tender’s financial viability appears questionable, reconsider participation. Additionally, view the proposal from the buyer’s perspective to ascertain its value for money.
- Account for all factors: Incorporate all expenses, including certification fees and miscellaneous charges.
- Be explicit: Specify what’s encompassed and excluded in the costing sheet to provide clarity to the buyer.
- Factor in inflation: For projects spanning over a year, account for inflation as a significant variable.
- Validate thoroughly: Prior to finalising the quotation, meticulously review all elements and figures.
When submitting a quotation, remember that the lowest bid doesn’t invariably secure victory. Buyers often prioritise value for money and assess other elements like quality standards, safety protocols, certifications, credibility, etc., before awarding the tender.
Disclaimer: Please note that the information provided in this article is intended for general informational purposes only and should not be construed as professional advice or relied upon as a substitute for consultation with qualified experts.