Understanding Cost Analysis vs. Price Analysis in Procurement

Nidhi15 Sep, 2025Technology

In procurement, distinguishing between Cost Analysis vs. Price Analysis is crucial. Price analysis compares the total price of a product or service to similar market offerings to assess its reasonableness. In contrast, cost analysis delves deeper, evaluating individual cost elements like labor, materials, and overhead to determine the fairness of a proposed price. Understanding these differences ensures informed decision-making, prevents overpayment, and strengthens supplier negotiations, leading to more effective and transparent procurement processes.