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Contracts & Pricing

Open-Book Pricing

Also known as: Open-book costing

Open-book pricing is an arrangement where a supplier discloses its underlying costs so the buyer can see how the final price is built up.

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Under open-book pricing, the supplier shares a breakdown of materials, labour, overhead and margin, giving the buyer visibility of what actually drives the price. This transparency builds trust, supports collaborative cost reduction, and makes price changes easier to justify because both sides work from the same figures rather than a sealed quotation.

Open-book works best in longer-term or collaborative relationships where the parties are willing to share information and jointly pursue efficiencies. It contrasts with fixed-price arrangements, where the supplier carries the cost risk and keeps its margins private. Buyers often pair open-book pricing with a target-costing approach to agree a fair margin while squeezing out avoidable cost.

Frequently asked questions

What is open-book pricing?
Open-book pricing is an arrangement where a supplier discloses its underlying costs — materials, labour, overhead and margin — so the buyer can see how the final price is built up.
When is open-book pricing most useful?
In longer-term, collaborative relationships where both parties share information to drive out avoidable cost, agree a fair margin, and justify price changes from the same cost data.

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