Understanding profit margins and cost breakdowns

Hi all, I’ve been a buyer for a few years now and this part of the job I really struggle with. In other words, when comparing quotes on a part, I don’t want to simply select the cheapest bid, anyone can do that. I want to be able to look at a cost breakdown and be able to read between the lines and find cost reduction opportunities on my own. Additionally, it would be great to understand how profit margins work, to understand if and how profit margins fit into shop rates, if a shop rate/PM is good or bad, etc 


Question - how where what is the best way to learn about these concepts? 


AIMDRIVE-AI Solution:

Suppliers typically do not share the breakdown of their price, however breaking down their price into material cost, labor cost, overheads and profit can reveal cost management opportunities.

Building a should-cost model based on industry benchmarks can help estimate what the price should be. Presenting this data encourages suppliers to clarify their pricing, leading to better price optimization and cost containment. Using tools like AIMDRIVE-AI (Free)  you can quickly generate a Should Cost estimate that can be used to understand costs and profit margin in an industry. They also provide examples such as this one on how to get a supplier to share cost data: https://aimdrive.com/solutions/getting-suppliers-cost-data/




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