Society of Cost Engineers

should costing is the practice of determining the "should cost" of a product, component or service prior to issuing a request for quote. should costing is similar and relies on some of the same principles of the typical cost estimating but is entirely different. should costing is an attempt to predict the cost / price of your supplier based on best in class processes. once you have this established you then use fact based negotiations your purchased components, assemblies or services. “should costing” is not the be all and end all to all procurement’s issues. it is merely a means to start having intelligent cost based discussions. a good negotiator will see where to ask questions and how to understand a suppliers quote if they understand a cost model. when developing a should cost, certain ground rules need to be set first. the idea is to develop a defendable, repeatable, possible but unobtainable “should cost”.