Expert answer:Need help with BUS 315 Cost and Price Analysis Wee

Answer & Explanation:”Best Use of Price Analysis” Please respond to the following:Examine all of the methods for performing a price analysis that VectorCal can use when creating its own price analysis, and then specify two to three (2-3) price analysis methods that would best serve VectorCal’s needs. Explain your rationale.From the e-Activity, speculate on key areas where most companies fall short when conducting price analyses. Suggest two (2) methods that a company CEO should use in order to reduce price analysis inconsistencies. Support your suggestion with real-world examples.bus315_w3_p2.pptx
bus315_w3_p2.pptx

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Cost and Price Analysis
BUS 315
Methods for Price Analysis
Topics
• To cover this objective, we will discuss the
following topics:
– Methods for performing price analysis
– Auxiliary techniques for price analysis
– The best way to do price analysis
Preferred Methods for
Performing Price Analysis
• Comparison of Proposed Prices Received in
Response to the Solicitation
– Consists of comparing offered prices to each other to
decide which are reasonable
– But an extremely low price, compared to others, may
indicate that the offeror did not fully understand the
requirement or that a mistake was made
• Comparison to Prior Prices Paid
– useful when the agency has had a history of
contracting for the same products or services
– Factors to be considered include the reasonablenes
of the base price and time since the last buy
Other Methods for
Performing Price Analysis
• Comparison to Prior Quotes
– Similar to comparing a present offer to prior prices
paid for the same item.
– Compares the present asking price to the prior
quotes, not just the price paid
• Comparison to Prices Paid for Similar Items
– Adds the complication of comparing something similar
rather than the same.
– Can be an imprecise method if you are comparing
with prices paid several months or a year ago
• Use of Estimating Relationships
– The “use of rough yard sticks”
– Measures such as dollars per pound for finished
products and dollars per square foot for finished
construction
Comparison of Offers to
Published Prices
• Comparison of Offers to Published Prices
– Catalogs put out by major retail companies
are recognized as fairly reliable guides on
current prices being paid by consumers
– Price analysis is based on an established
catalog or market price; the price paid for
commercial items; and the price for items sold
in substantial quantities to the general public
Comparison with Independent
Government Estimates
• Comparison with Independent
Government Estimates
– Can range from simple budgetary estimates
to complex estimates based on inspection of
the product itself
– Comparison with government estimates alone
is usually not a good idea. Sometimes
government people lack the complete and
current information essential to do reliable
price estimating
Auxiliary Techniques for
Price Analysis
• Value Analysis
– Can give insight into the relative worth of a
product
– Used to learn why prices are different for
products of the same basic type and whether
they are worth the difference
• Visual Analysis
– Consists of looking at an item and using our
experience to estimate its value
– Particularly useful when making small purchases
for repair parts
The Best Way to do
Price Analysis
• Two preferred techniques
– Comparison of proposed prices received in
response to the solicitation
– Comparison of prior proposed prices and
contract prices with current proposed prices
for the same or similar items
• Combination of methods
Check Your Understanding
Summary
• Methods for performing price analysis
• Auxiliary techniques for price analysis
• The best way to do price analysis
…
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