Cost Based Pricing for Procurement & Purchasing organization

Methodology and applied techniques of Cost Based Pricing for Procurement & Purchasing organizations and Manufacturing

Created by : Rated :4.3 9728 views

Last Updated: 2022-05-03 11:05:55 English Course Type: Self Learning

You will understand that different companies are using different logic for price setting.
You will understand the difference between Cost Based Prices, market prices and value based prices.
You will learn how to classify your costs: Direct and Indirect, Fixed and Variable.
You will gain an understanding of Economy of Scale principles – how the volumes influence the Cost Based Prices.
Finally, you will obtain more confidence talking about the price-related topics with your Suppliers, your Managers and Colleagues, your Stakeholders.

Welcome to the Cost Based Pricing course!

The course is prepared by the Procurement Professional for Procurement Professionals, so it brings not only the boring theory, but applied knowledge and practical tools. This course is a small extraction of Future Procurement development program and it is specially designed for the employees of Production/Manufacturing companies and the Purchasing professionals.

Cost Based Pricing is a niche course, it covers this specific approach to price calculation for the goods or services. You'll learn about the:

- Three general approaches to price setting,

- general principles of Cost Based Pricing,

- Direct and Indirect Cost Drivers for the price calculations,

- Variable and Fixed costs logic,

- Economy of Scale,

- Specific tools and advice for applying Cost Based Pricing for your business.

The course is structured in a way to allow beginners to start right at the beginning and learn the entire way on using the Cost Based Pricing model, while more experienced Procurement Professionals can begin with the lesson 4 where we start digging deeper to the core of the method.

Obviously this course is not answering all the questions connected to Cost Based Pricing, but it gives to you the good understanding of the logic and methodology, set of tools to be used and principles to be applied.

The best way to learn is applying these knowledge and techniques in your daily job! Once completed this course, you should be able to apply it to your own projects without the need for further guidance.

P.S. As a bonus - I have decided to share my e-books on Procurement. Some useful and fun read for you, some motivation and inspiration.

Enjoy your course and leave me a comment after you complete the course :)

Robert

Basic knowledge of finance is an advantage (but not obligatory)

Beginners and Professionals of Purchasing and Procurement organizations
Sales and Production managers of Production and Manufacturing companies
Supplying/Sourcing specialists of Retail and Wholesaling companies.

Section 1 : Introduction 1 Lectures 00:02:56
Lecture 1 :
Introduction and content of the course Preview
Section 2 : Pricing 3 Lectures 00:11:47
Lecture 1 :
What is price?
In this lesson we will elaborate on principal definition of the “price” and “pricing”. - Is money the only way to set the prices? What are the other alternatives for pricing? - Why money has become the most used way to state the prices?
Lecture 2 :
Why prices are different?
In this lesson you will understand why the prices for the similar products vary from seller to seller. Think about more examples of price differences: - Buying products in the big supermarket VS buying in the small local shop, - Buying in bulk volumes VS buying a single piece, - Paying in advance (prepayment) VS paying during purchase VS afterpayment.
Lecture 3 :
Three approaches to price setting
In this lesson you will see the example of pricing the same product in a different ways. Think about price setting methods for the following articles: - One stock of Facebook company, - Pre/ordering Tesla car and Iphone new model - Oil, wheat, natural gas and other traded commodities - Communal services for your household
Section 3 : Cost Based Pricing 6 Lectures 00:39:52
Lecture 1 :
Cost Based Pricing principles
In this lesson you will understand the approach to defining the cost drivers for the products or services and learn the principles for working with Cost Break Downs. Classify the cost into Direct/Indirect, Variable/Fixed: - Textile for the clothes production, - Salary of the CEO of the company, - Interest for the bank loan, - Depreciation costs, - Energy for the manufacturing machinery, - Marketing costs for the Retail company.
Lecture 2 :
Getting it all together: Cost Based Pricing example
This is a very important lesson for applying the Cost Based Pricing logic on real life example. You will understand the method of cost modelling and principles of economy of scale.
Lecture 3 :
Getting it all together: Cost Based Pricing example (continued)
Make own Cost Break Down for the products or services that your company provides. Use the forms attached in this link below. http://www.slideshare.net/BetterPurchasingDeve/creating-your-own-cost-break-down
Lecture 4 :
Pro’s and Con’s of Cost Based Pricing
In this lesson you will learn about strong and weak sides of Cost Based Pricing method. Think about your product or service: - What pricing method is used for it today? - How volatile is the market price for this product? - What are the advantages for you to use the Cost Based Pricing method for YOUR product/service?
Lecture 5 :
Best way to use Cost Based Pricing concept
In this lesson you will understand have the final tips and advice for starting to use the Cost Based Pricing principles in your work. Make the Cost Based Price model and discuss it with your counterparties, your colleagues or managers. Listen to their feedbacks and try to find the ways to optimize the prices.
Lecture 6 :
Good luck with using Cost Based Pricing!
I decided to give you a little bonus here :) Let me share my 3 books that I propose you to use for your own education and inspiration. I really hope you will enjoy reading. It is easy to follow and (hopefully) entertaining Good luck! Robert

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Robert Freeman,

233249 Course Views

8 Courses

I spent 15 years actively contributing to Procurement development of medium-size companies and large international corporations in Manufacturing and Retail, being a sourcing responsible for 800'000'000 Euro business. Was working with Retail and Manufacturing companies in Europe, Asia and North America. I truly believe in power of Procurement organization for the success of the entire company, and I want to spread my knowledge and experience to all over the world. That is why I developed a Future Procurement development program. Probably the best program in the world for Procurement professionals! I want to share my knowledge and engage as many people as possible around idea of improving the existing practices in our business, bringing our profession to a completely new level. My mission is: “To improve the world by Future Procurement organizations”.