Type: Economics
Pages: 3 | Words: 686
Reading Time: 3 Minutes

One of the most effective methods of price analysis is comparison of proposed prices received in response to the solicitation. This method “consists of comparing offered prices to each other to decide which are reasonable”. As a rule, consumers’ behavior is peculiar for the desire to buy more qualitative but cheaper goods. The exception is various brands which demand a consumer pay more because of the prestigious trend. This is the reason why an analyst needs to arrange all bids, and then, choose the most proper variant. If the price competition is adequate, then “competitive evaluation may be all that is needed to determine price reasonableness”.

One of the main advantages of the method under consideration is the fact that it is accurate enough to provide an opportunity to make a profound analysis of prices and to make a right choice as “it bases the reasonableness decision on current market price relative to the specific government requirement”. If the price is too low, a mistake can possibly be made, and it should be checked and corrected. On the other hand, if the price responds to the requirements of the current government, the price analysis can be considered effective.

The main influence of the government contracting on the prices is the fact that its representatives have an opportunity to regulate any prices. If they find them unreasonable, they can adopt a document, which guarantees the price change. In any case, the solicitation of the government is one of the most significant issues which are taken into consideration. If it does not apply to them, the prices are not reasonable.

Furthermore, this method provides an opportunity to forecast the likely price of an acquisition. This price as well as the calculation of some semi-variable costs, direst and indirect costs is performed by means of reviewing all price proposals. It is evident that this process includes “comparison of previously proposed prices and previous Government and commercial contract prices with current proposed prices”. It is evident that all kinds of costs of the same or similar items must be taken into account. For instance, while calculating some semi-variable costs, it is necessary to take into consideration only the same or the similar kinds of them. The rent price must be compared with the rent price which was peculiar for one of the time periods. Moreover, it is an effective method to find if the price is reasonable. Also, it is an opportunity to understand all advantages and disadvantages of each price.

The effectiveness of this method is proved by the fact that experience is a crucial issue. A price analyst not only has a chance to take into account the solicitation of the current period and the previous one, but also to compare the reasonable and unreasonable prices. This is the reason why this comparison shows that, in some cases, either the acquisition price or direct and indirect costs were too high or too low. These measures must give an analyst a hint if the current price is reasonable or not. Calculating the percentage of prices which were inadequate, as well as the level of their inadequateness is an opportunity either to increase or to decrease the costs at the same level.

In conclusion, it is noteworthy to admit that comparison of proposed prices received in response to the solicitation is one of the most effective ones. First of all, it includes consideration of the consumers’ needs. It is of common knowledge that the price can not be reasonable without understanding if a consumer is ready to pay one or another sum of money for the product. If there are some cheaper products of the same quality, the price can be considered to be unreasonable. Furthermore, government is one of the prominent factors of making the price reasonable. Experience is one of the inevitable parts of the method under analysis. It is almost impossible to lead a right price politics if no achievement or, on the contrary, misfortunes are put into consideration. It is significant to find all of them in order to prevent any errors and to make lucky decisions as frequent as possible.

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