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A sole-source proposal for a non-commercial item valued at $800,000
The cost based pricing may overlook costs that are not monetary. Cost based pricing may overlook inefficiency Cost based pricing may not take advantage of consumer surplus.
52.215-11. Unless an exception applies, FAR 15.403-4 (a)(1)(iii) requires the submission of certified cost or pricing data for any modification expected to exceed the current threshold, regardless of whether or not certified cost or pricing data were initially required.
Bills of quantities are used to provide detailed itemized lists of work items and materials required for a construction project. They assist in accurate cost estimation, tendering, and budgeting. Additionally, bills of quantities help in reducing ambiguity and ensuring consistency in pricing among different contractors bidding for the project.
The advantage of full cost plus pricing is the higher return on investment. The disadvantage of full cost-plus pricing is lower demand for the products.
Spencer A. Tucker has written: 'Pricing for higher profit' -- subject(s): Pricing 'The complete machine-hour rate system for cost-estimating and pricing' -- subject(s): Cost accounting, Pricing 'Cost-estimating and pricing with machine-hour rates' -- subject(s): Cost accounting, Industrial Costs, Prices
price analysis
Cost plus pricing is based on full product cost plus desired profit margin to arrive at the product price, while marginal cost plus pricing makes use of the product's total variable cost plus desired profit margin to arrive at the product's price. Marginal cost plus pricing (or "mark-up pricing) is based on demand, and completely ignores fixed costs in arriving at the product's price.
The speaker acknowledges that readers may object to the proposal due to its potential cost implications, questioning whether the financial investment required is justifiable. Additionally, readers may raise concerns about the feasibility of implementing the proposal and its impact on existing resources.
Cost based pricing uses the costs that were invested in producing the goods. In market based pricing, supply and demand are the key factors that determine price.
FAR 15.408 (c) states, "The contracting officer shall, when contracting by negotiation, insert the clause at 52.215-11, Price Reduction for Defective Certified Cost or Pricing Data -- Modifications, in solicitations and contracts when it is contemplated that certified cost or pricing data will be required from the contractor or any subcontractor (see 15.403-4) for the pricing of contract modifications, and the clause prescribed in paragraph (b) of this section has not been included."
I'm doing a school assignment so I have no clue! :)