Your pricing may be a simple way of thinking that you will be measured on the pricing, which would mean that as long as you are cheapest, you will win the Contract. This is not the case. Increasingly, Government Departments are now putting policies in place that ensure that during evaluation of the Tenders received, they are able to identify what value they are getting for the price you have proposed.
The value is looked at as some of the following:
- What quantity you are getting – Company A are providing only 50 hours of work for $9,000 while Company B is providing 100 hours of work for $10,000, then you know that Company B is providing better value, assuming that quality of those hours are specified in the Contract.
- What quality you are getting – Company A could provide the price of $10,000 but have identified that they will be using the cheaper and low quality product, while Company B had provided a price of $12,000 but have identified that they are providing high quality product that are accredited. This will mean that Company B are providing better value.
- Lifecycle cost – Company A is providing a product for $100,000 and Company B is also providing a product for $100,000, but Company A’s product will require $500 per year of maintenance, while Company B’s product will require $1,000 year of maintenance, then assuming a 10 year life of the product, Company A’s lifecycle cost will be $105,000 while Company B’s lifecycle cost will be $110,000. In this case, Company A will be providing a better value over the life of the product.
At the end of the day, all bids, tenders and proposal have a value proposition that is equated in the price a Tenderer puts foward and the value it deliveres for that price.
Value for money in any bid, proposal, or tender is demonstrated by your complete submission including the following:
- Right quality
- The solution that is fit for the purpose required by request for proposal
- Your organisation’s qualifications and experience
- Your solution meeting the environmental requirements
Pricing is your commercial offer. It is the amount you will charge for the value you will provide.
Pricing is often required to be presented in a particular format. You may be required to fill out the pricing table in a given format or in a spreadsheet with specific fields that you will need to complete. The pricing can either be a stand-alone requirement, or part of the Return Schedule.
Where a specific format for pricing is not stated in the requirements, you must provide a clear pricing structure of what value you will provide for the amount. Always provide the pricing in a clearly understood format that will not be subject to ambiguity.