Cost price analysis is an in depth study of the various factors that constitute the cost proposal of a product. Cost price analysis is performed only after taking into consideration the pricing situation and the detailed review of estimated price of contracted performance such that it aids one in forming an informed opinion about the fairness of the cost proposal.
Sample Cost Price Analysis
Organization performing the cost price analysis: Getwellsoon Pharmaceuticals
Product concerned: Aislephen Eye Drops.
Ingredients used and their corresponding costs:
- Brimodine solution – 2.5$
- Sulphides – 4$
- Chlorides – 3.8$
Manufacturing costs: an estimate of 80$ is made of the total manufacturing costs of the product. This includes individual cost of the elements, labor charges and the investment involved in the successful completion of the process.
Packaging Costs: the medicine must be preserved in an air tight container and kept in a cold moisture free place for best maintenance. A clean and sterilized set of droppers may be supplied with the solution for the convenience of the customer during its application.
Cost effective Methods: since the medicine must be made affordable for the masses, it is important to adopt several cost effective methods to keep its price within the reach of the general public. All perspectives of direct and indirect costs may be considered while framing the cost proposal.
Target Customers: since the target customers are mainly eye patients of all ages and classes, it is highly important to keep the cost price reasonable within the reach of the average patients.
Time Horizon: the time horizon or validity period of the purity of the eye solution must cover a considerable amount of time to be effective both in terms of health issues and economic contexts.
Discount Rates: the purpose of offering discounts specifically on wholesale purchase is to retain its sales popularity and thereby, help frame a reasonable cost proposal.