What does it actually cost you to produce a bid?
I have been asking CEOs this question for the past few months. The answer is almost always the same: they do not know.
These are people who can tell you their cost per hire, their cost per acquisition, their overhead recovery rate, and their gross margin by project type. They run $50M, $80M, $150M businesses where 30% to 60% of new revenue arrives through competitive tenders. The bid function is one of the most consequential cost centres in their organisation. And they have never calculated what it actually costs them to produce a single submission.
That is worth sitting with for a moment.
The Cost Nobody Calculates
Producing a tender response consumes real resources. Not just the bid writer’s time, but a much wider pool of effort that most companies rarely add up.
Start with the obvious: the people who write, edit, and coordinate the response. A bid manager, perhaps a proposal writer, maybe a coordinator pulling documents together. Their time on a mid-complexity bid might run 40 to 80 hours across three to four weeks.
Then add the subject matter experts. Your senior engineers, project managers, delivery leads. They get pulled into bid production to provide technical input, write methodology sections, review pricing, attend strategy sessions. Their time is the most expensive in the organisation, and it comes at the direct expense of the projects they should be delivering.
Then add management review. The MD or general manager who reads every submission before it goes out. The commercial director who signs off on pricing. Their involvement can be 5 to 10 hours per bid, and their hourly cost, calculated against salary and on-costs, is significant.
Then add the overhead that nobody tracks: the internal meetings to decide whether to bid, the chasing of inputs from people who are busy on delivery, the rework when the first draft does not meet the standard, the compliance checking, the formatting, the printing. The hours spent rebuilding content that the organisation produced six months ago for a similar tender but cannot find because it is buried in someone’s inbox or a shared drive.
When you add all of this together, a mid-complexity tender submission typically costs somewhere between $8,000 and $20,000 in internal effort. For more complex bids, infrastructure projects, defence work, major services contracts, the figure can exceed $50,000.
What The Losing Bids Cost You
Now multiply that by your bid volume. A company submitting 50 tenders a year at an average internal cost of $12,000 per bid is spending $600,000 annually on its bid function. If the win rate is 25%, which is common in competitive markets, 37 of those bids produced nothing. That is $450,000 in labour, senior staff time, and opportunity cost directed at work the company did not win.
Most companies would scrutinise a $450,000 line item in any other department. In the bid function, it is invisible because the cost is spread across salaries, project allocations, and overhead. Nobody reports it as a single number. Nobody is accountable for it.
The problem is not that companies bid and lose. Losing is part of the process. The problem is that most companies have no structured way of deciding which bids are worth the investment and which are not. The decision to bid is often made on gut feel, on the hope that “this one might come off,” or simply because the tender landed in someone’s inbox and nobody said no.
That is an expensive way to run a revenue function.
The Question That Changes How You Think About It
Once you know your cost per bid, every other question follows. What is your cost per win? How does that compare to the contract value? What percentage of your bid spend goes on tenders where you were never realistically competitive? How much senior staff time is absorbed by routine bids that do not require that level of involvement?
These are the economics of your bid function. Every other revenue-generating activity in your business has been instrumented, measured, and optimised over decades. Sales teams have CRMs, pipeline models, conversion metrics, and forecasting tools. The bid function, which generates a comparable share of revenue for many mid-market companies, often operates with none of this.
I am not arguing that every company needs to overhaul its bid operation. I am observing that most companies have never looked at the basic economics. And once they do, the conversation about how to structure, resource, and invest in the function changes entirely.
Run The Numbers Yourself
If you are curious about where your own organisation sits, we built a free Bid Cost Calculator that walks through the inputs and gives you a clear picture. No sign-up required, no sales call attached. It takes about five minutes.
Bid Cost Calculator:
https://tendl.ai/tools/bid-cost-calculator.html
The number might surprise you.
