Product price estimation and costing is a key part to the already tough job of outsourcing. The product cost estimation method is similar to product costing except for one small difference: while product costing is dedicated to completely new products, cost estimates only work with existing products that factories already make. We believe all cost estimations should check three main aspects: costs from alternative factories, specialized costing methods for a product break-down and prices not related to the product like logistics.
Firstly, comparing prices during the estimation and costing process provides you with a clear understanding of your market product cost. Secondly, checking the production information against what the factory estimates gives an accurate understanding of the real product cost. Thirdly, getting the product from the factory to your warehouse requires understanding of logistics and customs processes. These three parts give you a realistic product cost estimation that matches your plans. That’s why only relying on a few supplier quotations is a bad idea.