How to price a competitive bid
The winning price maximises your probability of winning at an acceptable margin — informed by market and award benchmarks, not guesswork.
Start with an honest cost build-up
Price from the bottom up: direct costs, overhead, risk contingency, and target margin. A price you cannot deliver on is worse than losing — abnormally low bids get scrutinised and failed delivery damages your reputation and bonds.
Anchor to market and award benchmarks
Your cost tells you the floor; the market tells you the ceiling. Where award values and comparable bids are visible, use them to understand the realistic winning range for this buyer, sector, and value band. Pricing in a vacuum is how strong bids lose on price.
Trade margin against win-probability
There is a curve between price and probability of winning. A lower price raises your odds but cuts margin; a higher price does the reverse. Choose the point that maximises expected value for your firm, given how much you want this specific contract.
Mind abnormally low thresholds
Buyers often must investigate abnormally low bids before award. If your price is far below the field, be ready to justify it — or reconsider whether you have mis-scoped the work.
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How do I price a tender to win?
Build cost from the bottom up, anchor to market and award benchmarks for comparable work, then choose the price that maximises your win-probability at an acceptable margin — not simply the lowest number.
What is an abnormally low bid?
A bid priced far enough below the field or estimate that the buyer questions whether it is deliverable; procurement rules often require the buyer to investigate before awarding.