Browse Definitions :
Definition

should-cost analysis (should-cost review)

Should costing is an analysis, conducted by a customer, of the supplier’s expenses involved in delivering a product or service or fulfilling a contract. The purpose of should-cost analysis is assessing an appropriate figure to guide negotiations or to compare with a figure provided by a supplier. Should costing is often used in procurement.

The processes in should-cost analysis can be labor-intensive. In a large organization, the engineering department typically arrives at a “should” cost for a product. Often this estimate is achieved by reverse engineering to determine the cost of parts. Then the additional costs of labor, materials, overhead and profit margin are added to that estimate.

Should costing can complement strategic sourcing or be used as an alternative method. In strategic sourcing, the traditional means of pricing, a company compares the quotes of at least three competitors for a product.

Promoted by the United States Department of Defense (DoD), should costing has become an integral part of the government procurement process in the United States with its inclusion in the Federal Acquisition Regulations (FAR).

This was last updated in June 2016

Continue Reading About should-cost analysis (should-cost review)

Networking
Security
CIO
HRSoftware
  • talent pipeline

    A talent pipeline is a pool of candidates who are ready to fill a position.

  • recruitment process outsourcing (RPO)

    Recruitment process outsourcing (RPO) is when an employer turns the responsibility of finding potential job candidates over to a ...

  • human resources (HR) generalist

    A human resources generalist is an HR professional who handles the daily responsibilities of talent management, employee ...

Customer Experience
  • churn rate

    Churn rate is a measure of the number of customers or employees who leave a company during a given period.

  • marketing campaign management

    Marketing campaign management is the planning, executing, tracking and analysis of direct marketing campaigns.

  • sales-qualified lead (SQL)

    A sales-qualified lead (SQL) is a prospective customer that has been researched and vetted -- first by an organization's ...

Close