Price Analysis

Price Analysis

 

Some form of price analysis is required for every purchase. The method and scope of analysis required are dictated by the dollar amount and circumstances attending each specific purchase. Price analysis is defined as the examination of a seller’s price proposal (bid) by comparison with reasonable price benchmarks without an examination and evaluation of the separate elements of the cost and profit making up the price.

 

A supply professional has five tools which can be used to conduct a price analysis: (1) analysis of competitive price proposals; (2) comparison with regulated, catalog, or market prices; (3) use of web-based e-procurement; (4) comparison with historical prices; and (5) use of independent cost estimates.