# Build a should-cost model for a purchased part

A bottom-up estimate of what a part should cost to make, used to challenge supplier quotes with facts.

- Topic: Finance & Accounting
- Framework: Few-Shot
- Level: Standard
- Tags: Finance, Fill-in Template
- Source: https://www.thinkwithprompt.com/prompts/build-a-should-cost-model-for-a-purchased-part

## Prompt

```text
Help me build a should-cost model for a part I buy, so I can challenge the supplier's price.

**Part description:** [WHAT IT IS, DRAWING DETAILS, DIMENSIONS, TOLERANCES, FINISH]
**Material:** [TYPE, GRADE, GROSS WEIGHT INCLUDING SCRAP, CURRENT PRICE PER KG OR UNIT]
**Likely manufacturing process:** [e.g. stamping, CNC machining, injection molding, assembly - steps if known]
**Supplier location:** [COUNTRY OR REGION - affects labor and overhead rates]
**Annual volume and batch size:** [UNITS]
**Current quote:** [PRICE, AND ANY BREAKDOWN THEY PROVIDED]
**Rates I have:** [LABOR RATE, MACHINE HOUR RATE, OVERHEAD %, MARGIN - or "unknown"]

Build the model in layers:
1. Material: net and gross weight, scrap or yield loss, material price.
2. Process: each operation with cycle time, machine rate, labor content, setup time amortized over batch size.
3. Tooling amortization, if any.
4. Overhead, SG&A, and a reasonable margin range.
5. Packaging and freight to our Incoterm.

Rules: use my rates where given. Where I don't have one, show the formula and mark the input [ESTIMATE - VALIDATE], never present a guessed rate as fact. Show every calculation so I can change inputs.

Return:
1. A cost breakdown table: Element | Basis | Calculation | Cost per unit.
2. Should-cost vs. quote, and the elements most likely driving any gap.
3. The 3 inputs the result is most sensitive to.
4. Fact-based questions to ask the supplier in negotiation (e.g. cycle time, scrap rate, material price basis).
```

## What to fill in

- WHAT IT IS, DRAWING DETAILS, DIMENSIONS, TOLERANCES, FINISH
- COUNTRY OR REGION - affects labor and overhead rates
- UNITS
- PRICE, AND ANY BREAKDOWN THEY PROVIDED
- ESTIMATE - VALIDATE

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