GlossaryKind of term: Cost and economicsPurchase price
What is a purchase price?
The purchase price is what you pay your supplier for a material, per kilo, metre, sheet or piece, and it belongs with a unit, a source and a date.
It covers semi-finished products too, and the unit usually follows the form: per kilo for an aluminium block, per metre for round bar, per sheet or per piece for plastics. The source is a purchase order, a supplier quote or a price list, and the date is the one on which the price applied. It is your price, reflecting your volumes and terms, not a market average.
What does the purchase price depend on?
A purchase price is rarely the base price alone. For metals, extras are common for size and small quantities, sawing per cut, a certificate and freight; for stainless steel and some other alloys an alloy surcharge that follows the quotations for nickel, chromium, molybdenum and other elements. Quantity, lead time, currency and the form you buy in matter too. Two quotes for the same material are therefore only comparable once you know what each price includes.
How does the purchase price work in practice?
The material line is usually the purchase price times the quantity of stock in the same unit, plus the extra costs not already in the price. An old price can push that line too high or too low; by how much depends on how far the material price has moved since. On a repeat order, the material price often explains part of the difference from the previous estimate, and a source and date on the price let you show it. Whether to ask for a fresh price comes down to its age, the material and the order value.
What is the purchase price often confused with?
The purchase price is not a market reference: a reference is a public series that shows the direction of the market, not a price you can buy at. Nor is it the same as the price per kilo, which is one unit a purchase price can be expressed in. And it is not the material line, which converts the price to the part, with allowance, saw cut and remnant.
How do you see the purchase price in Blake?
In the materials catalogue you record your own purchase price per material, with source and date, and its history is kept. A market reference sits beside it with source and date, for comparison and never as a purchase price. More on materials.
Frequently asked questions
What if I have no recent purchase price for a material?
Ask your supplier and record it with unit, source and date. Until then, the date on the previous price shows how old it is, and a market reference gives an idea of which way the market has gone since.
Why does every purchase price carry a date?
A price without a date cannot be judged. On a repeat order the date shows which price the previous estimate used, so you can account for any difference.
Is the alloy surcharge part of the purchase price?
Yes, if you pay it. For stainless steel and some other alloys the supplier charges a surcharge that follows metal quotations period by period. Record whether a price includes or excludes it, and for which period.