Cost and Price Analysis Course

This course assists both public and private sector buyers of both goods and services to learn those procedures and methods which will help them improve their effectiveness in obtaining fair and reasonable prices on their purchases.  Specifically, it will address use of the "Pricing Team"; methods of evaluating the market and bids/offers; price analytical/comparison techniques; various cost analytical methods; procedures for establishing realistic pre-negotiation profit positions; use of price, cost, and profit analysis in negotiations; and employment of "Strategic Cost Analysis" to effect significant organization-wide cost savings.


  • How to evaluate the market and bids/offers
  • How to use price analytical/comparison techniques
  • How to use various cost analytical methods
  • How to establish realistic pre-negotiation profit positions
  • How to use price, cost, and profit analysis in negotiations
  • How to establish an effective price/cost analysis team



I.     The Buyer's "Pricing Team" and the respective roles and responsibilities of each of the members

II.   Types of Markets and Supplier Pricing Strategies and the analytical methods appropriate to each

III.  Types of Contracts and the Analytical Methods Appropriate to each
IV.   Price Comparison Methods and How to Use Them
       A.   Comparison with competing offers on the instant purchase.
       B.    Comparison with established catalog prices.
       C.    Comparison with established market prices.
       D.   Comparison with prices set by law or regulation.
       E.    Comparison with current prices paid for the same or similar items, past prices paid for the same or similar requirements, and past offers.
       F.    Comparison with producer price and other market indexes.
       G.    Comparison with cost estimating relationships, to include rough yardsticks and parametric relationships.
       H.   Comparison with in-house estimates.
       I.     Comparison with values determined by value and visual analysis.
V.    Elements of Cost
       A.   Definitions- direct and indirect costs.
       B.    Cost estimating methods.
       C.    Obtaining cost proposals from suppliers.   

       D. Methods of analysis, including learning curve, engineering analysis, and accounting analysis.

VI.  Assessing Risk and Developing Pre-Negotiation Profit Objectives
VII. Using Price, Cost, and Profit Analysis in Preparing Positions for Negotiations with Suppliers
VIII. "Strategic Cost Analysis" Techniques Available to the Purchasing Manager



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