COST AND PRICE ANALYSIS

Cost and Price Analysis

[Name of the Institute]

Executive Summary

The research is about price analysis techniques, and how product prices are being determining and why. The paper includes the definition of the term pricing analysis and its practical implications. The main purpose of the price analysis is to find out the appropriate and suitable price of a product which is the base on various factors. One of the many factors of price analyzing, the comparison of prices of two or more companies is the most momentous one. In this analysis, the price of various companies that are making similar products is compare with each other, to determine the actual cost of the product. Further on the paper discusses the regulatory authority which is responsible for compiling the quality product list in accordance to the criteria and benchmarks set by the Federal acquisition regulatory (FAR).



Table of Contents

Price analysis4

Uses of Price analysis4

FAR 7.103 (i)4

Qualified Product List (QPL)5

FAR and Total Costs5

Adjustment to price5

Factors affecting buying decision6

Price analysis

Price analysis is the procedure of identifying the asking price of a product or a service and then comparing or examining the actual benefit the service or product is offering, with the asking price. The price analysis does not include the examination of cost and profit calculation which is being use by the manufacturer or vendor in making up the product or service. In other words, price analysis primarily focuses on comparing the price of the two different companies that are manufacturing or offering the same product or service to the consumer. When price competition does not exist, other various forms of analysis are determined in the evaluation. The price analysis includes the analysis of the previous price paid of the product; the comparison of supplier's price with the in house estimate, comparison of vendor's offering similar product or service and comparison of GSA prices.

Uses of Price analysis

The price analysis approach verifies that the actual and total price is fair and rational. It should be used when cost or pricing data are not available to the evaluator. Its practical implication can be viewed in the fact, that the government uses price reasonableness analysis to prevent itself from over paying the contractors for their work and services. The main purpose of the Price Realism Analysis is to verify that the contractor or officer is not excessively optimistic and impracticably cheap. The analysis also takes into various proposals into consideration that are stable price contract procurement. The analysis would also be applied to calculate the understanding of the officer regarding the project requirement and the risk associated with the officer's proposal. The analysis determines whether the contractor or officer is offering a price which is low that the performance of the contract will possess huge amount of risk.

FAR 7.103 (i)

Federal acquisition regulation (FAR) defines, in section 103, the regulations pertaining to promoting and providing competition amongst various vendors or manufacturers and contractors. It requires the officers to promote and provide full and open competition in context with the ...