What Is Tender Price?

Charlotte Miller

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Are you curious to know what is tender price? You have come to the right place as I am going to tell you everything about tender price in a very simple explanation. Without further discussion let’s begin to know what is tender price?

In the domains of procurement, construction, and business, understanding and accurately calculating costs play a pivotal role. One essential element in these areas is the “Tender Price.” The term “tender” in this context refers to the process of inviting bids or proposals for a specific project, service, or product. In this blog, we will explore what Tender Price means, its significance in various industries, and how it is calculated.

What Is Tender Price?

A “Tender Price” refers to the price at which a bidder, typically a contractor or supplier, offers to undertake a specific project or provide goods or services as part of a tendering process. The tendering process is a structured and competitive method used by organizations to select the best-suited contractor, supplier, or service provider based on various factors, with price being a significant consideration.

Key Aspects Of Tender Price:

  1. Competitive Bidding: In the context of competitive bidding, various entities or individuals submit their offers (tenders) to win a contract. The entity that proposes the most advantageous terms, including price, typically secures the project or order.
  2. Detailed Breakdown: A Tender Price is generally accompanied by a detailed breakdown of costs, including labor, materials, equipment, overheads, and profit margins.
  3. Legal Contract: When a tender is accepted, it usually forms the basis for a legally binding contract between the issuer of the tender (the client) and the successful bidder (the contractor or supplier).
  4. Price Variations: The Tender Price may include provisions for price variations to account for potential changes in costs over the course of the project.

Importance Of Tender Price

Tender Price is a crucial element in various industries and sectors, including construction, procurement, and services. Its significance can be understood through the following points:

  1. Cost Evaluation: It allows clients or organizations to evaluate and compare the cost proposals of different bidders, enabling them to make informed decisions.
  2. Contract Award: Tender Prices are central to the selection of a contractor or supplier, determining who is awarded the project or contract.
  3. Budgeting and Planning: Clients use Tender Prices to budget and plan for projects, ensuring that they can allocate resources appropriately.
  4. Profitability: For contractors and suppliers, submitting a competitive Tender Price is essential for securing contracts and ensuring profitability.
  5. Transparency: The tendering process, which includes the disclosure of Tender Prices, fosters transparency and fairness in procurement and contract allocation.

How Tender Prices Are Calculated?

Calculating a Tender Price is a meticulous process that involves considering a wide range of factors, including but not limited to:

  1. Cost of Labor: Calculating the cost of labor, including wages and benefits, for the work to be performed.
  2. Materials: Estimating the cost of materials, such as construction materials or goods to be supplied.
  3. Equipment and Tools: Accounting for the cost of equipment, machinery, and tools required for the project or service.
  4. Overheads: Factoring in indirect costs, such as administrative expenses, insurance, and utilities.
  5. Profit Margin: Determining the profit margin that the bidder wishes to earn from the project.
  6. Contingencies: Including allowances for contingencies or unforeseen circumstances that may affect costs during the project.


Tender Price is a fundamental concept in procurement and construction, playing a pivotal role in the selection of contractors, suppliers, and service providers. Accurate calculation and competitive Tender Prices are essential for both clients and bidders. They enable clients to make informed decisions and ensure that projects are completed on time and within budget. For bidders, preparing a well-considered Tender Price is vital for securing contracts, achieving profitability, and fostering trust in the tendering process.


What Is The Meaning Of Tender Price?

A tender price is therefore the price supplied by the tenderer to the client for the supply of those goods or services. The tender price is usually based on information about the project that has been supplied by the client in the ITT documents.

What Is The Difference Between Tender Price And Contract Price?

The difference here to be noted is that tender documents are offered to as many contractors as possible to get the lowest quotes for the work specified, while the contract documents are signed only with the contractor with lowest tender or rates.

What Are Tender Pricing Methods?

Firm sets the price and product price is set by looking at competitors in the market. Lower price is quoted and whole quoting the price cost and profits are considered and below the price is not submitted because below that firm will encounter losses. Quoted price is called tender pricing.

What Is Called A Tender?

Basically, a tender is an offer or invitation to bid for a project or to accept a formal offer such as a takeover bid. This term usually refers to the process through which the government and financial institutions put forward invitation bids for large projects. These bids are to be submitted within a given deadline.

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