Price Analysis - Definition & Meaning
What is Price Analysis?
Price Analysis is the analysis of consumer response to hypothetical prices in survey research. It is basically evaluating an anticipated price without evaluating its separate cost components and proposed profit.
Below are some of the techniques used for price analysis:
• Comparison with competitive bids: It is the best mean to validate the price. Herein we check the price quoted by other competitors for the same product
• Comparison with previous quotations: Under this current quotation is compared with previous quotations for the same or similar products
• Comparison with a published price list: Price of an item is compared with the prices of items published in the list. It is important to consider standard industry discounts in this case
• Similar item comparison: Compare prices with the price of the item which is quite similar to your product.
• Price set by law or regulation: Standard price set by law
However, many times, it is very difficult to find a comparable item. In this situation technical analysis is used under which below details are asked from the supplier of that item
• Materials list and their cost
• No. Of labor hours needed
• Tools requirement
• Scrap disposal
This technique is pretty time consuming thus its best to start the analysis as early as possible.
Hence, this concludes the definition of Price Analysis along with its overview.
This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
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