Although this method relies on comparing industry averages with the supplier’s quotation, for some discrepancies between the supplier's figures and the industry figures, the supplier may have valid reasons (more added value, customized products, etcetera). Next you will find the steps how to determine each cost category based on industry averages.
Whether the right information is present depends on several aspects like the source of the information, the type of industry, the geographical location of the industry and the sensitivity of the information.
In short, the following steps you should follow in order to determine the should cost price of the product:
The foregoing text, may be somewhat theoretical, examples often make it more clear. Therefore if you are interested in a more detailed(and real) example of this method in which the price of a specific type of cooling-equipment for a large machine is determined, please contact me for more information.
More methods will follow.