Tender Pricing Strategy: How to Price a Bid to Win Contracts

Your tender pricing strategy is one of the most important factors in winning a tender. However, it is a common misconception that the lowest price always wins.

In reality, buyers assess bids based on a balance of price and quality. This means your pricing needs to be competitive, realistic and aligned with your delivery approach.

If you are new to tendering, you may find it useful to read our guide on how to write a tender to understand how pricing fits into the wider process.

How pricing is evaluated in tenders

Most tenders are assessed using a combination of price and quality. Buyers assign weightings to each element, which can vary depending on the contract.

For example:

• 60% quality / 40% price
• 70% quality / 30% price
• 50% quality / 50% price

In some cases, pricing may carry less weight than quality. This means submitting the lowest price does not guarantee success.

You can learn more about this in our guide to tender scoring systems.

Does the lowest price win a tender?

No. Most public sector contracts are now awarded based on the Most Advantageous Tender (MAT), which replaces the previous MEAT approach under updated procurement regulations.

MAT focuses on overall value rather than just cost. This means buyers assess bids based on a combination of factors, including:

• value for money
• ability to deliver the contract
• quality of service
• risk management
• social value and wider benefits

This approach allows buyers to select suppliers that offer the best overall solution, not simply the lowest price.

A very low price can sometimes raise concerns about your ability to deliver the contract effectively.

How to develop a winning pricing strategy

1. Understand the scope fully

Before setting your price, make sure you fully understand the specification. Missing key requirements can result in underpricing or unexpected costs.

• review the full specification
• identify all deliverables
• consider staffing, materials and overheads
• factor in risks and contingencies

2. Align pricing with your delivery approach

Your price should reflect how you plan to deliver the contract. If your method statement outlines a high-quality service, your pricing must support it.

Inconsistent pricing and delivery can weaken your submission.

3. Be competitive, not unrealistic

Pricing too high reduces your competitiveness. Pricing too low can damage credibility and profitability.

Buyers may question abnormally low bids and, in some cases, reject them.

Your goal is to offer a competitive price that reflects realistic delivery.

4. Research the market

Understanding the market helps you position your pricing effectively.

• review similar contracts
• analyse competitor pricing trends
• consider regional variations

Pricing expectations can vary depending on location and sector.

5. Consider the weighting

If price has a lower weighting than quality, focus more effort on strengthening your written responses.

If price has a higher weighting, ensure your pricing is as competitive as possible while remaining viable.

6. Avoid common pricing mistakes

Common errors include:

• underpricing to try to win
• failing to include all costs
• ignoring risk and contingency
• using inconsistent pricing models
• not aligning pricing with the specification

These mistakes can lead to poor scores or delivery issues later.

How pricing and quality work together

Strong bids balance pricing with quality. A slightly higher price can still win if your quality score is significantly stronger.

This is why pricing should never be considered in isolation. It is part of your overall bid strategy.

For example, a well-written method statement supported by strong evidence can justify a higher price.

When price is the main factor

In some tenders, particularly RFQs (Request for Quotation), price may be the dominant factor.

In these cases:

• ensure your pricing is highly competitive
• focus on accuracy and compliance
• avoid unnecessary additional costs

However, even in price-driven tenders, quality and compliance still matter.

How to improve your pricing over time

Pricing improves with experience and feedback. After each bid:

• review pricing outcomes
• compare against competitors where possible
• analyse feedback from buyers
• refine your pricing model

This helps you build a more effective pricing strategy over time.

FAQs

Does the cheapest bid always win?

No. Most tenders are awarded based on value for money, not just price.

What is MAT in tendering?

MAT stands for Most Advantageous Tender, which focuses on overall value rather than just cost

How do I make my pricing competitive?

Understand the market, align pricing with delivery and ensure all costs are included.

Can a low price be rejected?

Yes. Buyers can reject abnormally low bids if they believe the contract cannot be delivered effectively.

Should I prioritise price or quality?

This depends on the weighting. Always review evaluation criteria before deciding your approach.

About the Author

Written by Joshua Smith, a seasoned bid-writing expert with experience across the UK, Middle East, and US, helping organisations secure the contracts they deserve through high-quality, competitive tender responses.

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