Cost Modelling

A cost model decomposes a price into materials, labour, machine time, overhead, logistics and margin, using assumptions about quantities, rates and yields. It gives buyers an independent view of what an item ought to cost, which strengthens negotiation, exposes where a quote looks inflated, and helps compare suppliers on a like-for-like basis rather than on headline price alone.

Cost models range from quick estimates to detailed engineering-based builds, and their accuracy depends on the quality of the input data. Kept up to date with current material and labour rates, a model becomes a reusable tool for should-cost analysis, target costing and understanding how movements in key cost drivers will flow through to price.