Guides / How to price a bid for a public contract
How to price a bid for a public contract
Price usually carries 20 to 60 percent of the score in a public tender, and in some lowest-price procedures it decides everything. The goal is the price that wins on the published formula while leaving you a margin you can live with for the full contract.
Reviewed 8 Oct 2026 by the Bidstage team.
Build the cost from the specification
- List every deliverable, service level and obligation in the specification and contract terms.
- Estimate effort and materials for each, including management, reporting, travel, insurance and mobilisation.
- Cost the risks: penalties, service credits, price fixed for several years, payment terms (often 30 days).
- Add overhead and your target margin, then check against the buyer's estimated value in the notice.
Understand how price is scored
Read the formula in the documents. The most common one gives full marks to the lowest price and scores others proportionally:
| Formula | Effect |
|---|---|
| Score = lowest price / your price x max points | Each 10 percent above the lowest costs about 10 percent of the price points. |
| Score based on distance from the average price | Very low prices gain little; staying near the pack is safer. |
| Price per quality point | Quality and price are combined into one value-for-money ratio. |
Model a few price levels against likely competitor prices. Contract award notices for similar past contracts, published on TED, Find a Tender, Contracts Finder or SAM.gov, show what buyers have paid before.
Avoid an abnormally low tender
If your price looks too low, EU and UK buyers must ask you to explain it and can reject the tender if the explanation is not satisfactory (Article 69 of Directive 2014/24/EU in the EU). Keep a short costing note ready that shows how you reach your price.
Protect your margin over the term
- Check whether the contract allows price indexation. If not, price in expected inflation for multi-year terms.
- Fill in the pricing schedule exactly as instructed; unpriced lines may be read as included at zero cost.
- Do not hide costs in quality answers. Evaluators compare the method and the price.
Questions
Should I always bid the lowest price?
No. When quality carries most of the weight, a better response at a fair price usually beats the cheapest bid. Check the weighting and formula first.
Where can I see what similar contracts sold for?
Contract award notices on TED, Find a Tender, Contracts Finder and SAM.gov publish the awarded value and winner for many contracts.