There are many methods for developing cost models to try and determine what purchased component and services costs should be. All the methods have one thing in common; they produce estimates that turn out to be wrong.

The results can be disastrous and include missed new business opportunities because the models provide estimates that are too high and margin losses when the models provide estimates that are too low.

Using predictive pricing methods, we can move beyond should be costing to determine the probability a supplier will quote a specific price. Using the methods, we can improve the capture rate on new business opportunities and the margins on the awards.

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