A contractor on UK Business Forums set the problem out about as plainly as it can be set out. A two-year public sector guide contract. A schedule of rates to complete. Three lines to price: senior technician, technician, apprentice. Then a percentage for materials. No quantities, no guaranteed volume, and two years of cost movement to absorb.
That is the honest version of “how do I set the price when bidding for a tender types“. It is not a question about undercutting the competition. It is a question about how much you are allowed to know before you commit, and how much of the buyer’s risk you are being handed without being told.
Start with what the job costs you
Before any of that, the question we ask every client is the plain one: what does it actually cost you to deliver this, and what margin do you want on it? Not the margin you usually make, the one you want on this particular job. Firms that start from what they think will win, rather than from their own numbers, find out in year two what they agreed to.
That is also the argument for reading the whole pack rather than the pricing schedule on its own. The specification, the risk register and the quality questions all tell you what you are being asked to carry, and risk you have identified is risk you can put a number against. Risk you have not identified turns into a variation you will struggle to claim for.
Read the split before you open the spreadsheet
Every published public tender has to tell you how it will be evaluated. Where there is more than one criterion the buyer must set out their relative importance, though the Act lets it do that by percentage weighting, by ranking or by describing it another way, so a clean 60/40 is common rather than compulsory. People price first and read second, which is the wrong way round, because the weighting changes what a sensible price even is.
There is no typical split, whatever you have been told. Three real examples from Find a Tender:
- Newcastle City Council’s cavity wall and loft insulation contract, a two-year
term advertised at an estimated £240,000 including VAT, weighted price at 60% and quality at 40% (notice 2025/S 000-016492, 23 April 2025, checked 20 August 2026).
- Mansfield District Council’s upgrade works at Sherwood Court, procured through
Nottinghamshire County Council, ran price at 80% and quality at 20%. It was advertised at £300,000 excluding VAT (notice 2025/S 000-016339, 4 April 2025) and the contract was signed at £342,654.78 excluding VAT (contract details notice 2026/S 000-000296, published 5 January 2026, checked 20 August 2026).
- The North West Construction Hub consultancy framework for 2024 to 2028
reversed it: quality 70%, price 30% across all eight lots (notice 2024/S 000-026799, checked 20 August 2026).
Same country, same market, all three live within about a year of each other, and the price weight runs from 30% to 80%. Anyone publishing a “typical” 60/40 as though it were a rule is guessing, and pricing to a guess is how firms lose money on the work they win.
The weighting tells you where your effort goes. At 80% price, a beautiful method statement will not save a dear bid. At 30%, shaving your rates to the bone buys very little and costs you the ability to staff the job properly. We go into how different buyers set these criteria in what criteria do different buyers use to evaluate tenders.
Work out how your price becomes a score
The weighting is only half of it. The other half is the formula, and that is where most bidders stop reading.
One method turns up constantly: relative price scoring, where the cheapest compliant bid takes full marks and everyone else is scored as a proportion of it. Mansfield’s notice above spells it out in the buyer’s own words: “Price will be evaluated based on a maximum of 80 marks (weighting – 80%) for the lowest priced compliant tender (subject always to the provisions noted above in relation to abnormally low tenders). Other tenders will be awarded a number of points in direct proportion to the relation between their tendered price and the lowest tendered price.” Under that method, being 10% dearer than the lowest bidder on a 60% price weighting costs you about five and a half marks out of a hundred, because 60 multiplied by (lowest divided by yours) scores you 54.5. Some authorities instead deduct the percentage difference straight off the weighting, which makes it a round six. Either way you can work it out in advance. Most people do not, and then cannot explain why they lost.
Central government’s own commercial guidance has been unhappy with this method for years, and the current guidance still is. The Cabinet Office’s Procurement Act 2023 guidance on assessing competitive tenders tells authorities to be “particularly aware of the potential negative impacts on value for money of the use of relative scoring mechanisms”. The older Bid Evaluation Guidance Note of May 2021 put it harder: relative price scoring “should be treated with caution and not be used unless there is a specific business reason which has been approved by the commercial lead and the project SRO”. That note is Cabinet Office good practice written for central government departments rather than a rule binding every contracting authority, and it was written under the Public Contracts Regulations 2015 and never rewritten for the Act, but it is still published and still signposted from the government’s own Procurement Act guidance (checked 20 August 2026).
The alternatives it points to are price per quality point, where your price is divided by your quality score, and benchmark scoring, where price is scored against a target the authority has set. The practical difference for a bidder is that an absolute method scores your price on its own merits rather than against whoever came in lowest.
Decide how low is too low, and know who decides
The Procurement Act 2023 sets no percentage that makes a price abnormally low. People go looking for one.
What it does set out is section 19. A contracting authority may disregard a tender where it considers the price abnormally low, but section 19(4) requires it to tell the supplier first and give it a reasonable opportunity to demonstrate it can perform the contract at that price. Section 19(5) then says that if the supplier does demonstrate this to the authority’s satisfaction, the tender may not be disregarded on that ground (checked 20 August 2026).
Read as a bidder, that says something useful. A low price is not disqualifying. An unexplained low price is. If you have genuinely stripped cost out through your own efficiency, a depot ten minutes away, plant you already own, a framework you are already mobilised on, then you can price it and defend it, and the buyer is not entitled to bin you for it without asking.
Two limits before you lean on that section. It governs the award of contracts at or above the published thresholds, which from 1 January 2026 are £5,193,000 for works and £207,720 for goods and services at a council or other sub-central authority. Below those figures the buyer is running a regulated below-threshold procurement under Part 6 of the Act, section 19 does not apply, and the authority sets its own abnormally low policy in the pack. Both council contracts above are below-threshold ones, and the Mansfield notice carries its own abnormally low provisions on the face of it.
The second limit is geography. All of the above is the position in England, Wales and Northern Ireland. Scottish devolved buyers sit outside the Act, and their rule is stronger: regulation 69 of the Public Contracts (Scotland) Regulations 2015 says a contracting authority must require an explanation where a tender appears abnormally low, not may (checked 20 August 2026).
Central government adds its own tripwire. The Sourcing Playbook tells departments to refer any abnormally low bid more than 10% lower than either the average of all bids or the Should Cost Model Estimate to the Cabinet Office’s Commercial Strategy, Assurance and Standards Team, which reviews it at its discretion. The Playbook attaches that to complex outsourcing (checked 20 August 2026). That is internal guidance rather than a rule binding your local council, so do not quote it at a district authority. It does tell you what a very low price triggers centrally: scrutiny, delay, and a conversation you have to be ready for.
A useful stopping rule: stop cutting at the point where you can no longer write down, in one paragraph, why your price is what it is. Not “we sharpened our pencil”. Something a stranger could audit.
Filling in a schedule of rates
Now the forum’s actual problem. A schedule of rates is a priced list used where the buyer knows roughly what kinds of work it will need but not how much, which is why it turns up on term maintenance and reactive works contracts. You are not pricing a job. You are pricing a promise to do unknown quantities of work at a fixed figure for a fixed period.
That changes what belongs in a day rate. A rate on a schedule has to carry the things a job-priced quote recovers elsewhere: travel and mobilisation to scattered sites, downtime between call-offs, supervision, the apprentice’s non-productive hours, and the cost of holding capacity available for volumes that may not arrive.
On year two and beyond, look for the indexation clause before you assume you are stuck. Term contracts commonly carry an annual review tied to a published index, and the Cabinet Office’s own guidance says the index has to come from an official source, which in the UK means the Office for National Statistics. Read the cap carefully if there is one. That same guidance is blunt that “caps and collars distort the ability of indexation to reflect actual inflation”, which in your terms means a capped clause hands part of the inflation risk back to you. If there is no clause at all, you are being asked to fix a price against two years of wage movement, and that risk has to sit somewhere in the rate.
On materials markup, we are not going to invent a number
There is no official published figure for what percentage you should add to materials on a public sector schedule of rates. We checked on 20 August 2026: no provision of the Procurement Act 2023 sets one, none of the Cabinet Office pricing guidance sets one, and neither of the two schedules that would carry such a convention does either. M3, which publishes the M3NHF Schedule of Rates, says so itself: “There is no single current percentage uplift or discount for the M3NHF Schedule of Rates because contracts vary in nature, stock profile and are also influenced by regional differences and market conditions.” Trade forums will give you a range. Those are opinions, and we are not going to launder someone’s forum post into a benchmark by printing it here.
What we will say is what the number has to survive. Whatever you put down will be compared against other bidders, may be scored, and will be applied to every material purchase for the life of the contract. If your markup only works when you buy in volume, and the contract delivers a trickle of small orders, you have priced a business you do not have.
Do not forget when the money actually arrives
Price and cash flow are the same decision for a small firm, and public sector work is better on this than most people expect, as long as you know which section applies to you.
Section 68 of the Procurement Act 2023 implies a payment term into public contracts, other than concession contracts, utilities contracts awarded by a private utility and contracts awarded by a school. Any sum due must be paid within 30 days beginning with the day the invoice is received, or the day payment falls due under the invoice if that is later. That term does not apply if the authority considers the invoice invalid or disputes it, but it has to tell you without undue delay if it does, and the Act sets out what makes an invoice valid: your name, a description of what you supplied, the sum requested and a unique invoice number. Get those four right and the clock is running. Any term purporting to restrict or override that has no effect, and section 73 flows the same terms down into most public sub-contracts.
If your contract is below the thresholds, and most council term work is, the equivalent provision is section 88, which does the same job for regulated below-threshold contracts on the same 30-day clock and with the same carve-out for invoices the authority considers invalid or disputes.
One date to check before you rely on any of this. The Act took over on 24 February 2025. Where the buyer had already awarded the contract, concluded the framework or published the notice before that date, the Public Contracts Regulations 2015 are saved and still run the procurement, including their own 30-day payment rule at regulation 113. Call off a framework set up in 2024 and you are still on the old regime (checked 20 August 2026).
If you have been pricing in the cost of slow payment because that is what your private sector clients do, check what this contract actually says before you carry that cost into the rate. We cover what else changed for smaller suppliers in what the Procurement Act means for SMEs.
The rate you can defend beats the rate you can afford
A bid that wins on price is not usually the cheapest one in the room. It is the one whose price is legible: the buyer can see what it buys, why it is that number, and what happens to it in year two. A cheap rate with no working behind it invites the abnormally low conversation, and a dear rate with no working behind it just loses.
If you are staring at a schedule of rates with a deadline on it, the two things worth doing first are reading the pricing methodology properly and checking the indexation clause. Most of the money is decided there. If you want a second opinion before it goes in, that is what a bid review is for.