How to price a care tender without sacrificing margin

Winning work at an unsustainable rate creates pressure on staffing, quality and cash flow. A sound tender price begins with the service the commissioner requires, not the number a provider hopes will be competitive.

Translate the specification into a delivery model

Start with the required hours, visit patterns, service locations, operating times, staffing ratios, management cover and reporting obligations. Identify which costs change with care hours and which costs must be funded even when activity is lower than expected.

Build the full workforce cost

Basic pay is only one component. Include employer National Insurance, pension contributions, holiday pay, sickness assumptions, travel time, mileage, training, recruitment, checks, uniforms and realistic use of agency cover. Add supervision and on-call capacity where the contract requires them.

Recover management and overhead

The rate must contribute to scheduling, quality assurance, finance, HR, technology, insurance, premises and senior management. Omitting these costs may produce an attractive bid price, but it transfers the burden to the rest of the business and weakens long-term delivery.

Model activity and payment risk

Framework awards do not always guarantee volume. Test the price at different utilisation levels and consider voids, cancelled calls, mobilisation costs, payment terms and commissioner deductions. Cash-flow timing can be as important as the headline margin.

Stress-test the contract term

Consider wage increases, inflation, pension changes and other cost pressures over the full contract period. Review whether the terms include indexation or a price-review mechanism. Where recovery is uncertain, make the exposure visible before approving the bid.

Approve the price and the assumptions together

A final rate without its assumptions is difficult to challenge or manage. Record the cost base, target margin, activity level, exclusions and key risks so senior reviewers can decide whether the opportunity remains commercially acceptable.

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