Build your price from the bottom up: real costs for labor, materials, equipment, subcontractors, insurance, bonds and overhead, plus a profit you can defend. Then test it against the market using past awards and bid tabulations for similar work. Fill in the buyer's price form exactly, check every number twice, and price only what the solicitation asks for.
Start with the scope
Pricing errors usually start as reading errors. Before you build a number, confirm what is being bought, in what quantities, for how long, and how the price will be evaluated.
- Is it a lump sum, unit prices, hourly rates or a mix?
- Are quantities firm or only estimates?
- How long is the term, and are there renewal years?
- Is there a price adjustment or escalation clause?
- Are there alternates, options or allowances to price separately?
Build costs from the bottom up
List every cost of doing the work, line by line, using current quotes rather than memory.
- Labor, including wages, payroll taxes, benefits and any prevailing wage requirements.
- Materials and supplies, with freight and waste.
- Equipment, owned or rented.
- Subcontractors and suppliers, from written quotes.
- Permits, travel, lodging and mobilization.
- Insurance and bond costs required by the solicitation.
- Reporting, meetings, testing and closeout tasks the contract requires.
Add overhead, risk and profit
Overhead covers the costs of running your business that are not tied to one job, such as office staff and rent. Add a share of it to every bid. Then look at risk: unclear quantities, tight schedules, price swings in materials or a long term without escalation. Price real risks openly rather than hoping they will not happen. Finally, add a profit you can defend. Winning work at a loss does not help your business.
Write down each assumption behind your price, such as crew size, production rates and material prices. If the buyer later asks how you reached a number, or an addendum changes the scope, you can adjust quickly instead of starting over.
Check your price against the market
Public pricing is often public. Bid tabulations show what each bidder offered on past solicitations, and award records show contract values. Look at similar work from the same buyer and nearby buyers. If your price is far above or below the range, find out why before you submit. BotBid's pricing research gathers past awards and bid tabulations for similar work, and a person still sets the final number.
Fill out the price form correctly
- Use the buyer's form exactly, without changing its layout or wording.
- Fill in every line; write zero or no charge where the form allows rather than leaving it blank.
- Check units, extensions and totals. Many solicitations state which number governs when a unit price and an extended total disagree.
- Avoid unbalanced pricing, where some items are priced far above cost and others far below. Buyers may reject it.
- Do not add conditions or exceptions unless the solicitation allows them.
- Acknowledge every addendum that changed quantities or scope.
Final review
Have a second person check the math and compare the price form to the cost sheet. Confirm the authorized signer signs where required. Keep your full pricing file; you will want it for the next bid and for any questions after opening.
After the opening, compare your price with the bid tabulation and note where you landed. Over time, this record shows which of your cost assumptions run high or low, and it makes each future price faster and more accurate.
Rules vary by agency and state; check the solicitation and your own advisers.
What did they pay last time?
Pricing research
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Illustrative narration with fictional examples. Review source requirements and approve prices, signatures and submissions yourself.
What did this city pay last time? Who bid? Who won? BotBid pulls the past awards for this buyer and others like it, so you walk in knowing the price range.
The loyal buyer
Winning Bid Advisor
Read transcript
Illustrative narration with fictional examples. Review source requirements and approve prices, signatures and submissions yourself.
Some buyers keep picking the same company. Year after year. BotBid spots it from the award history, and tells you exactly how far under the incumbent you need to be.
Common questions
Should I always aim to be the lowest price?
Only when the award is based on price alone. On best-value awards, a slightly higher price with a stronger proposal can win.
What if costs rise during a long contract?
Look for a price adjustment clause. If there is none, include the risk of rising costs in your price.
Can I see what competitors charged before?
Often yes. Bid tabulations and award records are usually public and can be requested from the buyer.
What if I find a mistake after bids are opened?
Contact the buyer in writing right away. Rules on correcting or withdrawing a bid after opening are strict, and bid security may be at risk.