Guide to Contract Pricing - Essay Example

Among the various methods, a consumer should choose the one that suits the important facts of his purchases. If I would be allowed to select only one price analysis method throughout the course of my career, I would select the price competition method for price analysis Price Competition is the most popular and the widest used technique of price analysis. It is very handy and easy to conduct. Also, it does not involve much in-depth research. All a consumer needs to do is to consider the prices quoted by several other suppliers in the market and evaluate them closely.

A price competition normally exists when prices quoted by different suppliers differ by 15% (Murphy 2009). The lowest price may not always be the most reasonable price for you. There may be chances of errors in the quotation and also the quality of the good or service provided may also not be up to the required level. Also, there may be costs associated with the product to make it a better one that may have not been incurred, and thus resulting in a lower price. Hence, when using the price competition technique, it is important that the consumer demands a statement on why the quoted price has been set by the supplier.