Methodology
Bid / No-bid Economics Planner methodology
Educational only: Business decision support, not accounting, tax or legal advice.
Privacy: Calculations run locally; Margin101 does not receive your commercial inputs.
Update policy: Reviewed when formulas or official dependencies change.
Scope: Market-neutral small-business planning using your own assumptions.
1. Formulas and units
contributionIfWonExTax = contract price โ delivery cost โ capacity opportunity costWhere
- contractPriceExTax
- Contract price (currency units/won bid, ex tax)Source: Business record
- deliveryCostExTax
- Delivery cost (currency units/won bid, ex tax)Source: Business record
- capacityOpportunityCostExTax
- Capacity opportunity cost (currency units/bid opportunity, ex tax)Source: Business record
- contributionIfWonExTax
- Contribution if won (currency units, ex tax)Source: Calculated output
expectedBidValueExTax = win probability ร contribution if won โ bid preparation costWhere
- bidPreparationCostExTax
- Bid preparation cost (currency units/bid submission, ex tax)Source: Business record
- winProbability
- Win probability (decimal probability of the submitted bid winning)Source: User assumption
- contributionIfWonExTax
- Contribution if won (currency units, ex tax)Source: Calculated output
- expectedBidValueExTax
- Expected bid value (currency units, ex tax)Source: Calculated output
breakEvenWinProbability = bid preparation cost รท contribution if won when contribution is positiveWhere
- bidPreparationCostExTax
- Bid preparation cost (currency units/bid submission, ex tax)Source: Business record
- winProbability
- Win probability (decimal probability of the submitted bid winning)Source: User assumption
- contributionIfWonExTax
- Contribution if won (currency units, ex tax)Source: Calculated output
- breakEvenWinProbability
- Break-even win probability (decimal rate)Source: Calculated output
Money inputs and outputs use the currency selected in the scenario without changing the canonical methodology. Rates, margins, utilisation and buffers are entered as percentages and converted to decimal values for calculation.
2. Worked example
Input assumptions
The rows below come directly from the exact engine using the visible default fixture.
- Contract price
- 20,000 currency units/won bid, ex tax
- Delivery cost
- 12,000 currency units/won bid, ex tax
- Bid preparation cost
- 1,000 currency units/bid submission, ex tax
- Capacity opportunity cost
- 2,000 currency units/bid opportunity, ex tax
- Win probability
- 0.25 decimal probability of the submitted bid winning
Calculation and outputs
Contribution if won
contributionIfWonExTax = contract price โ delivery cost โ capacity opportunity cost- Contract price
- 20,000 currency units/won bid, ex tax
- Delivery cost
- 12,000 currency units/won bid, ex tax
- Bid preparation cost
- 1,000 currency units/bid submission, ex tax
- Capacity opportunity cost
- 2,000 currency units/bid opportunity, ex tax
Engine result: 6,000 currency units, ex tax
Expected bid value
expectedBidValueExTax = win probability ร contribution if won โ bid preparation cost- Delivery cost
- 12,000 currency units/won bid, ex tax
- Bid preparation cost
- 1,000 currency units/bid submission, ex tax
- Capacity opportunity cost
- 2,000 currency units/bid opportunity, ex tax
- Win probability
- 0.25 decimal probability of the submitted bid winning
- Contribution if won
- 6,000 currency units, ex tax
- Break-even win probability
- 0.166667 decimal rate
Engine result: 500 currency units, ex tax
Break-even win probability
breakEvenWinProbability = bid preparation cost รท contribution if won when contribution is positive- Delivery cost
- 12,000 currency units/won bid, ex tax
- Bid preparation cost
- 1,000 currency units/bid submission, ex tax
- Capacity opportunity cost
- 2,000 currency units/bid opportunity, ex tax
- Contribution if won
- 6,000 currency units, ex tax
- Expected bid value
- 500 currency units, ex tax
Engine result: 0.166667 decimal rate
Example
The rows below come directly from the exact engine using the visible default fixture.
- Contribution if won
- 6,000.00
- Expected bid value
- 500.00
- Break-even win probability
- 16.7%
- Clears economic threshold
- Yes
The exact engine-derived outputs are shown in the labelled rows below.
Interpretation
Expected value combines probability and economics but does not predict whether the bid will be won.
3. Validation and boundary checks
- All values must be finite and remain inside the visible input boundaries.
- All money values use one consistent ex-tax basis and period.
- Rates must remain inside their engine-owned boundaries.
- Break-even win probability is unavailable when contribution if won is not positive.
- The economic threshold clears only when raw expected bid value is zero or positive.
- Contract price minimum
contractPriceExTax โฅ 0 currency units/won bid, ex taxโ A lower value is rejected before calculation.- Contract price maximum
contractPriceExTax โค 10,000,000 currency units/won bid, ex taxโ A higher value is rejected before calculation.- Delivery cost minimum
deliveryCostExTax โฅ 0 currency units/won bid, ex taxโ A lower value is rejected before calculation.- Delivery cost maximum
deliveryCostExTax โค 10,000,000 currency units/won bid, ex taxโ A higher value is rejected before calculation.- Bid preparation cost minimum
bidPreparationCostExTax โฅ 0 currency units/bid submission, ex taxโ A lower value is rejected before calculation.- Bid preparation cost maximum
bidPreparationCostExTax โค 10,000,000 currency units/bid submission, ex taxโ A higher value is rejected before calculation.- Capacity opportunity cost minimum
capacityOpportunityCostExTax โฅ 0 currency units/bid opportunity, ex taxโ A lower value is rejected before calculation.- Capacity opportunity cost maximum
capacityOpportunityCostExTax โค 10,000,000 currency units/bid opportunity, ex taxโ A higher value is rejected before calculation.- Win probability minimum
winProbability โฅ 0 decimal probability of the submitted bid winningโ A lower value is rejected before calculation.- Win probability maximum
winProbability โค 1 decimal probability of the submitted bid winningโ A higher value is rejected before calculation.
4. Assumptions and source classification
- All hours, utilisation, costs, rates and recovery targets are supplied by the user.
- Money values use one consistent ex-tax basis.
- No provider fee, jurisdiction, benchmark or demand forecast is embedded.
- Raw engine precision is retained until display.
This planner has no current policy-data dependency. Its commercial assumptions are user supplied. Registered family-level regression suites exercise the shared business-logic engine and worked-result reconciliation.
5. Limitations
- Results depend on the completeness and classification of the entered business records.
- The planner does not forecast demand, utilisation, supplier terms or project outcomes.
- This is educational business decision support rather than accounting, tax, legal or financial advice.
- Win probability and capacity opportunity cost are user scenarios rather than market forecasts.
- The result does not assess tender terms, legal obligations, strategic value or delivery risk outside the entered costs.
This is educational decision support, not tax, accounting, legal or financial advice. Check the treatment of your actual transactions under the rules that apply to your business and seek qualified advice where appropriate.
6. Update and evidence policy
Registered family-level suites test formula invariants and example reconciliation; the release ledger records that coverage without claiming a separate oracle for every line of public copy. There is no official threshold or benchmark to refresh for this planner. Commercial inputs remain user-supplied because they vary by business and contract.
Change history
- : Initial public release of the Bid / No-bid Economics planner and methodology.
Related reading
Guides to interpret the decision and its assumptions.
- How to Decide Whether to Bid on a Low-Margin Job
Separate job contribution from capacity, cash timing, strategic value and downside risk before deciding whether to bid.
Read guide