We price a tender to demonstrate value for money, not simply to be the cheapest. That means a transparent cost breakdown, stated assumptions and clear evidence of deliverability under the most advantageous tender (MAT) approach. Attach a pricing spreadsheet, a payment profile and a VAT treatment statement, and be ready to explain your figures if a buyer flags them as abnormally low.
TL;DR:
- Relative price scoring can cause small differences to disproportionately impact your outcome if bids cluster closely; model your price against the published methodology before submission.
- A clear cost breakdown must include roles, direct costs, subcontractor margins, overheads, margin, contingency, mobilisation, and VAT, with objective assumptions.
- An abnormally low tender typically signals risky omissions or unrealistic assumptions, and authorities must notify and allow explanation before disregarding it.
- Matching your pricing model to contract scope—fixed, unit, indexed, or hybrid—helps accurately reflect whole-life costs and risk sharing.
- Demonstrating payment performance, such as paying 95% of invoices within 60 days, is increasingly crucial for securing larger contracts.
Table of Contents
- How evaluators assess price in UK public tenders
- What to put in your pricing schedule and cost breakdown
- How buyers treat abnormally low tenders
- Choosing a pricing model and costing whole-life value
- Protecting cashflow on payment terms
- Where to trade quality for price and when to hold the line
- Option: how BidBlock organises evidence and speeds pricing work
- FAQ
- Sources
How evaluators assess price in UK public tenders
Under the Procurement Act 2023, contracting authorities award contracts on the basis of the most advantageous tender, weighing price against quality rather than defaulting to the lowest figure. In many services contracts, price commonly accounts for around 30 to 40% of the evaluation score, with quality making up the remaining 60 to 70%. That split rewards bidders who can show competence and social value alongside a sensible price.
Contracting authorities must publish their award criteria and assessment methodology, or a summary of it, in the tender notice and accompanying documents, under obligations set out in the guidance on assessing competitive tenders. Use that published methodology to model how your price will actually score, rather than guessing.
Several scoring techniques appear across tenders, and each behaves differently when prices cluster close together:
- Relative price scoring ranks bids against the lowest or average price submitted, which can punish a bid that sits just above the pack.
- Price per quality point divides price by a quality score, rewarding efficiency rather than raw cheapness.
- Benchmarking against a should‑cost model compares your price to the buyer's own estimate of fair cost.
The bid evaluation guidance note warns that relative scoring methods can produce bid‑bunching, where several suppliers price close together and small differences swing the outcome disproportionately. Testing your price against the published methodology before submission helps you see these effects before they cost you the contract.
What to put in your pricing schedule and cost breakdown
A commercial schedule needs to let an evaluator check your numbers line by line and trust that nothing has been left out. Build it around these elements:
- Resource rates and quantities, broken down by role, day rate and number of days or hours.
- Direct costs, including materials, travel and any site-specific expenses.
- Subcontractor costs, quoted separately with their own margin shown rather than folded into your rate.
- Overhead allocation, stating the method used (percentage of labour cost, fixed sum, or another basis).
- Margin, shown as a distinct line rather than hidden inside rates.
- Contingency, sized against identified risks rather than an arbitrary round number.
- One-off mobilisation costs, covering setup, recruitment or equipment before service starts.
- VAT treatment, stated clearly so the evaluator knows whether figures are gross or net.
Document any assumption as an objective, verifiable trigger rather than a vague caveat. "Assumes access to site during standard working hours, 8am to 6pm, Monday to Friday" is allowable and checkable; "assumes reasonable cooperation from the client" is not, and risks being read as a qualification that weakens your bid.
Present your payment profile or milestone schedule on a separate tab or page, showing when invoices fall due against deliverables. A brief covering note should summarise how the schedule links to your method statement, flag any assumptions, and confirm the VAT position in one or two lines.
Pro Tip: Keep your assumptions list to objective, time‑bound statements an evaluator could check against the contract documents, not opinions about how the client might behave.
How buyers treat abnormally low tenders
An abnormally low tender is one that appears too cheap to deliver the contract reliably, often caused by omitted costs, unrealistic productivity assumptions, or funding arrangements that would not be lawful in a normal commercial setting. Contracting authorities are alert to these patterns because an unsustainable price tends to surface later as poor delivery, disputes or renegotiation.
Prepare evidence before you submit, not after a query arrives:
- A detailed cost model showing how every rate and quantity was derived.
- Supplier quotations for subcontracted or outsourced elements.
- Historic margins from comparable contracts, where available.
- Supply-chain invoices that support your stated unit costs.
- Productivity assumptions, referenced against a method statement or past delivery data.
If your price is flagged, the process is a safeguard rather than a trap. Under the Procurement Act 2023, a contracting authority must notify you and give a reasonable opportunity to explain and demonstrate deliverability before it can disregard your tender on these grounds. Treat that notice as an invitation to show your working, not as a rejection.
Choosing a pricing model and costing whole-life value
Whole-life cost covers everything a buyer pays across the life of a contract, not just the headline bid price: running costs, maintenance, replacement cycles and eventual decommissioning. The NAO's guidance on managing the commercial lifecycle recommends buyers use benchmarks and price indices to test whether a bid's lifetime cost stacks up, and flags cases where unsustainably low bidding led to contracts being redesigned after award.
Match your pricing model to the nature of the work:
- Fixed price suits well-defined deliverables where scope is unlikely to change.
- Unit rates suit variable-volume work, such as per-case or per-hour services.
- Indexed pricing suits multi-year contracts exposed to inflation or input-cost swings.
- Hybrid models combine a fixed core service with variable elements for demand spikes.
Set out risk sharing, any indexation clause and your inflation assumptions in plain terms, so the evaluator sees exactly who carries the cost if circumstances change.
Protecting cashflow on payment terms
Larger procurements increasingly test a bidder's approach to payment, not just price. PPN 018 requires in-scope major contracts to use supplier questionnaire questions on payment performance, such as demonstrating payment of 95% of invoices within 60 days, or providing an action plan where that standard is not yet met.
Cost practical mitigations into your schedule rather than absorbing the risk silently:
- Mobilisation fees to cover upfront cost before revenue starts flowing.
- Staged or milestone billing instead of a single end-of-contract payment.
- Contractual protections for subcontractors' own payment terms.
- Short-term facilities or invoice factoring, costed as a line if genuinely needed.
Pro Tip: Present payment risk as a managed item with a stated mitigation, never as a reason to inflate your price across the board.
Where to trade quality for price and when to hold the line
Cost reductions belong on deliverables where quality is hard for an evaluator to verify directly, not on the core outputs the contract exists to deliver. Before submission, run three checks: have someone outside the bid team read the pricing narrative cold, have finance sanity-check every rate against real payroll and overhead figures, and review contingency against the specific risks you listed rather than a flat percentage. Any efficiency claim should carry evidence behind it, not just an assertion.
— Syed
Option: how BidBlock organises evidence and speeds pricing work
Pulling together a cost breakdown, assumptions and supporting evidence under deadline pressure is where most bid teams lose time. Our AI workspace at BidBlock helps you organise that evidence, draft pricing inputs from your own historical bids, and surface past pricing examples that worked, which is part of why our clients report a 75% win rate.
| What you need | How we help |
|---|---|
| Evidence for cost assumptions | Organised evidence library drawn from past bids |
| Pricing inputs drafted quickly | AI-assisted drafting grounded in your own data |
| Confidence under deadline | Structured workflow across the bid team |
Explore our Free, Standard, Pro and Max plans and start with a free trial to see whether our workspace fits your next tender.
FAQ
What percentage should price count for in a tender?
Price commonly accounts for around 30 to 40% of the evaluation in many public-sector services contracts, with quality carrying the rest. The exact split is set by the contracting authority and published in the tender documents, so check each notice individually.
What counts as an abnormally low tender?
An abnormally low tender is one that appears unable to deliver the contract reliably, often due to omitted costs or unrealistic assumptions. Under the Procurement Act 2023, the authority must notify you and give a reasonable opportunity to explain before disregarding your bid on this basis.
What should a tender pricing schedule include?
A pricing schedule should show resource rates, quantities, direct and subcontractor costs, overhead allocation, margin, contingency, mobilisation costs and VAT treatment. It should sit alongside a payment profile and a short covering note explaining key assumptions.
Do buyers check how suppliers pay their own subcontractors?
For major contracts, PPN 018 requires in-scope authorities to ask suppliers about payment performance, such as paying 95% of invoices within 60 days. Smaller contracts may not carry this requirement, so check the specific procurement documents.
Does BidBlock help with pricing specifically?
Our platform helps you organise evidence and draft pricing inputs from your own historical bids rather than generic templates, alongside tender discovery and response drafting. Plans range from a Free tier to Standard, Pro and Max, each available on our plans page.