For people conducting business, they have to look at the pricing and costs of commodities to be in a position to plan on whatever action to take before purchase or beginning a business. Sellers have two main objectives in contract pricing first is to cover all costs and second is to be a part of the contribution to attaining corporate operational goals. To be successful, a businessperson has to identify the reasons why a seller is selling a commodity at a particular price. Various factors contribute to pricing in a specific manner. The seller either uses cost-based pricing that is mostly concerned with analyzing a product from a specific company or firm. Under each of the pricing strategies, a buyer has to be aware of the approach of the seller so that they can also be on a safer side when it comes to purchasing and if they intend to change their plan. Being aware of this will help the buyer to mark the strategy of the seller and be in a position to negotiate on the price of the commodity being purchased.
A buyer should be careful especially where the seller uses a market skimming pricing system, or markets share pricing through which the seller in most cases aims at making profits by selling commodities lower than the other competitors. Quality should be valued more because nothing of high quality would be sold at a throwaway price below the minimum to attract more buyers and for purposes of making huge profits. A product that is expensive most often has a higher rate. A seller may also lower the prices during a promotion made to clear a stock that has stayed for long before the commodity is finished therefore to help in disposing they end up reducing the costs to bring new items. During the purchase of products, one should focus on ensuring that they choose commodities with fair and reasonable pricing to help them not to spend a lot more on commodities that are not worth the amount being displayed therefore having proper negotiation skills will help to bargain to achieve the value they think is reasonable. Reasonable price is one which a competent buyer thinks is good and they are willing to pay for the commodity without any complaint or intent to negotiate on the price.
Price analysis is a process that involves evaluation of a price proposed for an item to help in determining if the price is fair notwithstanding the characteristics of that item. Mostly price analysis is used to help when a seller is not required to give the pricing data. Analysis of prices often involves comparing one price to another for evaluation of the reasonableness of the price displayed on an item.
In the business competencies, negotiation is a process through which a seller and buyer communicate at a personal level using effective skills of communication to achieve the primary goal of favorable pricing in buying and selling. A person with excellent negotiation skills can seal good deals that lead to development at all levels. A person with excellent skills for negotiation is at a more advantage even when seeking employment. To be a person who negotiates successfully, on needs to be well prepared especially before the negotiation, it is the leading factor for success. Second, the practice of the virtue of patience is also another factor that contributes to effective negotiation. The third is having self-control especially over emotions to avoid getting angry unnecessarily helps a negotiator to conclude a successful process. The proper method of communication is also a factor that helps the process of negotiation be successful a negotiator should be clear. The negotiator should be an active listener to ensure that they hear all that the other party is also saying to understand their intention. They should be ethically upright ad persons who can be relied on to convey the wants of a company or government.
A lot of skill and knowledge is required especially in the contractual cost price and business competencies that involve negotiations. A well trained and equipped negotiator is appointed to person such functions for purposes of achieving good results from the negotiation process on behalf of the organization. Ensuring that the best interests of the organization are considered and also to purchase goods of reasonable and fair price and high well deserved quality depending on the budget and quality needed.
Contract Pricing Reference Guidelines Volume 1 (2012) retrieved on 3rd January 2019 from http://publiccontractinginstitute.com/wp-content/uploads/CPA1.2.pdf
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