Understanding product cost is one of the more problematic issues facing a Buyer. As stewards, Buyers need to know if they receive fair and reasonable pricing. In a competitive environment, a Buyer can usually ‘understand’ pricing when using a handful of solicitations. The supplier quotations, with some variation, tend to be clustered around some median.
However, in the cases where a company’s product is ‘sole sourced,’ it is necessary to find another way to determine a fair and reasonable cost. That is where a ‘Cost Analysis’ template comes into play.
A ‘cost analysis’ allows the Buyer to ‘understand’ the total price of a product or service. The supplier completes the cost analysis, by disclosing their raw material, direct labor, overhead and other costs, and returns it to the Buyer. The hardest part is getting suppliers to cooperate.
This Cost Analysis Template provides the Buyer with,
- A complete analysis of a supplier’s cost to build the Buyer’s product
- It shows estimated and historical costs for the product
- The template breaks down the suppliers cost into,
- Raw Materials
- Direct Labor
- Fixed Costs
- General & Administrative
- Total Quoted price per unit
- The Cost Analysis also requires the supplier to list or keep separate all tooling and Engineering development costs.
- The Buyer can still use this form to have the supplier submit these costs.
- The Cost Analysis allows the Buyer to obtain a per unit price, as well as the total price for the ‘job’ from the supplier, that is based upon the ‘lot size.’
Once payment is received, you will receive the template within 48 hours.