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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 on supplier quotes alone, WTP enables you to break down prices into components such as direct materials, direct labour, energy, and freight, providing full transparency into how prices are built.

When should you use WTP?

Use WTP when you want to:

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

How WTP works (in simple terms)

WTP combines four key-elements:

  1. Prices & Indices
    1. Have access to >5,000 commodity prices and indices (e.g. plastics, steel and energy). 
    2. >70 pre-set freight indices across the world (Air Freight, Sea Freight, Road Transport).
  2. Cost Profiles
    1. Defining Cost Drives (Materials, Labour, Overheads, SG&A and profit).
    2. Compare Industry Cost Profiles within multiple regions.
    3. Create your own Industry Cost Profile.
    4. Compare your Industry Cost Profile with the market average.
  3. Freight Lanes
    1. Create your specific freight lanes from location A to location B
    2. Save your freight lane to be updated, each month.
    3. Use your freight lane in your Cost Models
    1. Add your product details
    2. Add your supplier details and (historical) buying prices
    3. Add your Bill of Material Cost Models

In general, all above information should help you to:

  • Identify Cost Drives
  • Understand price fluctuations (up- and down)
  • Benchmark supplier pricing
  • Support negotiations with facts

 

What makes WTP Valuable?

  • Transparency; you see exactly how a price is built up.
  • Objectivity; decisions are based on data, not assumptions.
  • Speed; quickly analyse price changes and scenarios.
  • Negotiation power; use data-backed insights to strengthen your position.

 

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 know whether the increase is justified or not.

 

Key Concepts in WTP

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

  • Prices & Indices: Track the developments of commodities, currencies, indices and freight indices.

  • Cost Profile: Shows the structure of costs within different cost drives.
  • Cost Model: calculates what a product should cost, based on facts.

 

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