Should Cost

Analytical estimate of what a product or service ought to cost based on materials, process, labor, overhead and reasonable margin.

Examples

01A should cost model for a cable harness adds copper weight, machine time, labour at EUR 8 per hour and a 10 % margin to reach EUR 11.40.
02The buyer reviews the should cost result with the supplier's quote of EUR 13.80 to find where the gap comes from.
03Using the should cost analysis, the buyer negotiates the price down to EUR 12.20 and records the saving with finance.