Apples to Apples The Comparison Price Approach to Tender Evaluation

The comparison price approach quantifies every non-price difference in monetary terms, producing a single total cost of ownership figure for each bid. The logic is simple: take the offered transfer price, then add or subtract adjustments, a bonus for advantages and a malus for disadvantages, until each bid reflects its true cost to your organisation.

The adjustments come in two flavours:

• Relative factors that scale with total cost and are expressed as a percentage, for example payment terms, efficiency differences, or expected maintenance cost per unit of output.
• Absolute factors that are fixed amounts, for example internal set-up costs, switching costs, or supplier qualification costs.

Crucially, only the differences between bids matter. You are not building an exhaustive cost model; you are pricing the gaps between one offer and the next.

Consider an incumbent supplier (A) facing two challengers (B and C), evaluated against a 60-day payment target and an 8% internal interest rate:

• Bidder B has the lowest sticker price at $3.0m, but switching to it triggers $0.2m in switching costs.
• Bidder A, the incumbent, quotes $3.1m and creates no switching costs, but its 30-day payment term is 30 days short of target, a 0.7% malus (30/360 multiplied by 8%).
• Once all relative and absolute adjustments are applied, Bidder A lands at a comparison price of $3.15m, Bidder B at $3.22m, and Bidder C at $3.65m.

The headline winner flips. Bidder B offered the cheapest price, yet Bidder A is the most competitive bid once switching costs and payment terms are monetised. That is exactly the kind of distortion a comparison price is built to expose.

A comparison price can be applied directly, where bidders calculate their own comparison price using a rubric or spreadsheet you provide, or indirectly, where the buyer does the maths. The right choice depends on how sophisticated your suppliers are and whether you intend to run a live auction.

With less experienced suppliers, the indirect method avoids overwhelming them with a complex bid process. Even then, it pays to tell each bidder its own comparison price and the winning comparison price afterwards: educating suppliers on where they fell short sharpens competition in future tenders. With sophisticated suppliers, the direct method lets them see exactly how lowering their transfer price moves their comparison price, and their odds of winning.

The real payoff comes when you feed the initial comparison prices into a dynamic auction. Because every non-price element is already fixed, the auction can run on a single variable. The auctioneer runs a clock on comparison price and quotes each bidder the transfer price that brings its own comparison price to the clock value:

• In an English (descending) auction, the clock starts at the lowest initial comparison price and falls each round. Trailing bidders must cut their transfer price to match it, and the clock descends until one supplier remains.
• In a Dutch (ascending) auction, the clock starts low enough that no one accepts and rises toward a ceiling equal to the lowest initial comparison price. The first bidder to accept wins. A useful default is to start the clock around 20% below the lowest initial comparison price.

Because all qualitative judgments are locked in before the final round, the negotiation collapses to one clean number while staying fully comparable across suppliers. If price is not your only concern, you can keep one or two other variables open, but every extra negotiable dimension adds time and complexity.

Point-based evaluation is the alternative most procurement teams already know: price and quality criteria are combined into a single weighted score, and the highest score wins. It is widely used, and in regulated settings such as much of EU public procurement it is mandated. But it carries two practical weaknesses.

First, the ranking depends on weights the buyer sets and rarely discloses, and small changes to those weights can swing the result dramatically. Second, points integrate poorly with live auctions. If price is, say, only 50% of the score, the scheme quietly tells bidders that price competition matters less, encouraging them to hold back on the very dimension you most want to drive down. Experimental research (Camboni et al., 2025) finds that forcing suppliers to bid on price and quality simultaneously under a scoring rule adds complexity that actually reduces efficiency and buyer value compared with simpler, one-dimensional auctions.

A linear price-scoring rule typically uses a reserve price (the maximum acceptable) and a threshold beyond which the score stops improving, which dampens the pull toward recklessly low bids. From that rule you can derive the monetary value of a point (MVP), how many dollars a single point is worth. One trap to avoid: scoring price against the lowest bid received. In a dynamic auction the lowest bid moves every round, so the scoring base keeps shifting and the rules become needlessly opaque.

Our recommendation is to reach for the comparison price approach first. It gives a consistent, auditable framework, separates relative from absolute cost effects, and forces cross-functional teams to confront what non-price factors actually cost. It is the natural choice whenever the main differences between bids can be reliably translated into money, and it is effectively required if you want to run a dynamic auction, since those presuppose a single negotiable variable.

Point-based scoring earns its place when the rules demand it, or when non-price factors genuinely matter as much as, or more than, price. It is faster to compute and easier to explain, which can be decisive in routine or time-pressured tenders. But even then, two numbers should always be made explicit:

• The monetary value of a point, so the cost of your quality weights is visible.
• The point gap between the winner and the runner-up, which tells you exactly how much the runner-up would have had to undercut the winner for the decision to flip.

Make those explicit and a points system recovers much of what makes the comparison price approach powerful: a transparent monetary trade-off across every criterion. Even when subjective judgment dominates, points are best treated as a structured starting point from which you derive a real monetary equivalent, never left as an unexamined score. Designing this trade-off well sits at the heart of procurement mechanism design, alongside decisions on auction format and lot structure.

Doesn't the comparison price approach just hide subjective judgment behind a number?

It does the opposite. The method forces you to state, in money, what each qualitative difference is worth, and to do so before the final negotiation, when the figures cannot be reverse-engineered to favour a preferred supplier. The assumptions behind every adjustment, such as the interest rate or the switching-cost estimate, are written down and auditable. Point-based scores can bury those same judgments inside undisclosed weights.

We're bound by public-procurement rules that mandate a scoring model. Is this approach useless to us?

No. Where points are required, you can still publish the monetary value of a point and the score gap between the winner and the runner-up. That keeps the central virtue, a transparent monetary trade-off across every criterion, inside the rules you have to follow.

When is point-based scoring actually the better fit?

When regulation demands it, or when non-price factors genuinely matter at least as much as price and you do not intend to run a dynamic auction. In those cases points are quicker to compute and easier to communicate, just keep the monetary value of a point explicit.

Want to put a defensible comparison price behind your next tender? Competitio designs mechanism-based tenders across 16 industries and more than EUR 35bn in negotiated volume, with Prof. Dr. Christian Rieck on our scientific advisory board. Get in touch to pressure-test your evaluation model, or try our procurement quiz first.