What is WTP (What's The Price)?

WTP (What’s The Price) is a data-driven cost and pricing analysis tool that helps procurement and commercial teams understand, calculate and explain product prices based on underlying cost drivers. Instead of relying solely on supplier quotes, WTP breaks down prices into components such as direct materials, labour, energy, and freight, giving you insight into how prices are built.

When should you use WTP?

Use WTP when you want to:

• Track market developments for commodities, currencies, energy, indices or freight.
• Understand what a product should cost.
• Analyse and explain price changes within your category.
• Prepare for supplier negotiations.
• Build fact-based sourcing strategies.

What makes WTP valuable?

• Transparency - understand how prices are built.
• Objectivity - base decisions on market data.
• Speed - analyse changes quickly.
• Negotiation power - support negotiations with facts.

Example

A supplier increases the price of plastic packaging by 12%. With WTP you can:

1. Check the actual plastic price development.
2. See how much of the product cost comes from direct materials.
3. Calculate the expected price increase.
4. Compare this with the supplier's proposal.

Result: You can assess whether the supplier's price increase is supported by market developments.

The main modules in WTP

WTP combines four key elements:

1. Prices & Indices
   
   1. Track more than 5,000 commodity prices and market indices.
   2. Monitor more than 70 freight indices.
2. Cost Profiles
   
   1. Analyse industry cost structures.
   2. Compare countries and regions.
   3. Create Custom Industry Cost Profiles.
   4. Benchmark against industry averages.
3. Freight Lanes
   
   1. Create freight lanes.
   2. Monitor freight rates.
   3. Use freight lanes in Cost Models to calculate landed costs.
4. Cost Models
   1. Build should-cost models.
   2. Add supplier information.
   3. Add Bills of Material.
   4. Compare purchase prices.

Together, these modules help you:

• Identify cost drivers
• Understand price fluctuations (up and down)
• Benchmark supplier pricing
• Support negotiations with facts

Key Concepts in WTP

To fully understand WTP, it helps to know these building blocks:

• Prices & Indices – Monitor market developments.
• Industry Cost Profiles – Understand industry cost structures.
• Cost Models – Calculate the expected should-cost of a product.
• Freight Lanes – Compare transportation costs with current market rates and include freight in your cost models.