Price analysis can be described as a review, analysis or evaluation of the price which is charged by the supplier and whether this price is fair and reasonable. It involves determining whether the price charged is fair and reasonable through considering the quality, delivery and other factors influencing the price of a commodity (Edward, 2009). Government contracting involves awarding contracts based on competition between various bidders. This enables the contract to obtain a fair and reasonable price. Fair and reasonable prices are determined by government contracting through comparing proposed prices.
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Government contracting professionals consider all conditions that influence pricing competition such as demand and supply. Government contracting is considered to be fair and reasonable as it consider competition among bidders in order to determine the price. It also considers economic conditions that affect bidders’ prices (Pring, 2004). It involves asking different suppliers about their price of a certain commodity or product. After analyzing the prices, which are charged by each supplier, it will enable a person to establish whether a given price is reasonable or not. The products in which the prices are analyzed should be similar or identical. In this case, the prices of different suppliers are analyzed, and the lowest price is chosen. This means that the lowest price is fair and reasonable (Edward, 2009).
This method is used in various situations as it enables customers to know the prices of suppliers before making their choice decision. It is also used in the manufacturing sector to determine the reasonable price of the manufactured products and also in the service sector. It is an easy method of establishing the fair and reasonable price as compared to the other methods of price analysis (Pring, 2004). This is because it involves only comparing different prices charged by different suppliers, and then choosing the lowest price which is considered to be the fair price. It is a quick and easy method of evaluating different prices charged on an identical product or service. It enables a buyer to make the right decision when buying a certain commodity or service. It is the most valid method as it involves comparing price offers under the same market condition (Edward, 2009).
Government contracting is done on the internet which enables a high level of price comparison hence reasonable price is obtained. This involves huge integration of a database which includes various types of contracts. This enables the government contract professionals in need of price comparison data to search the web to get full information (Edward, 2009). Through this form of technological innovation government contracts are able to get a fair and reasonable price (Edward, 2009). A competitive environment enables the price charged to a contract to be fair and reasonable.
This is because it involves negotiation between various suppliers on the pricing of an identical product or service. This enables the buyer to obtain the product at a reasonable and fair price this is the most widely used method as compared to cost analysis method of predicting prices. It considers all factors that may affect pricing in order to establish the reasonable and fair price of a commodity. It can be described as the rivalry between suppliers on the basis of price (Pring, 2004). The price is usually of identical items. It involves the comparison of two or more competitive bids. Price competition is used in many cases to validate prices of commodities in a given market (Edward, 2009).
Edward, J. (2009). Guide to contract pricing: Cost and price analysis for contractors, subcontractors, and government agencies. New York: Management Concepts.
Pring, M. (2004). Pring on price patterns: The definitive guide to price pattern analysis and interpretation. New York: McGraw-Hill.