Should-cost analysis
Should cost modelling · Clean-sheet costing
Should-cost analysis estimates what a product or service ought to cost from its underlying materials, labour, process, overhead and margin, rather than accepting a supplier's quoted price as the starting point.
Saved terms stay in this browser. No account or server request is involved.
Simply put
What it means in ordinary work
It builds a cost estimate from the ground up. The result is a negotiation and design tool, not a claim that the supplier's accounts are wrong.
Why it matters
A cost model exposes which assumptions move the price and where design or process changes could create value. It supports more informed negotiation than comparisons with historical quotes alone.
A hypothetical in practice
A hypothetical packaging buyer models board, printing, tooling, transport and expected margin for a standard carton. The model suggests that reducing print colours and consolidating order sizes could lower the total cost without squeezing supplier margin.
Common pitfalls
A detailed model can look more precise than the data allows. Show ranges, assumptions and confidence rather than one authoritative number.
Using a should-cost estimate as an accusation damages the relationship. Use it to ask better questions and test cost drivers.
Regional lens
How this lands where you work
The global explanation is canonical. Regional notes are additive, separately sourced and shown with their own review state. They never replace the global meaning.
Loading your saved region.
As-of date for date-sensitive regional content: 5 November 2026. Read the review policy.