Raw Materials Should-Cost Analysis
A should-cost model for raw materials rebuilds the supplier's price from the bottom up — materials, labor, overhead, margin — so you enter every negotiation with a defensible target instead of a "gut feel" discount.
Raw materials often anchor 40–70% of COGS and move with commodity indices most buyers never track line by line. The model exposes exactly where each dollar goes, so you can pressure the right lever instead of asking for a flat percentage off.
Index-linked clauses, spec relaxation and dual sourcing typically capture 5–12% of category spend. SourcingHub's should-cost engine builds this model in minutes, with the raw materials-specific drivers pre-loaded.
Fields every Raw Materials should-cost analysis should cover
- Material grade, spec and tolerances
- Annual volume and delivery cadence
- Index / benchmark reference (LME, CRU, Platts)
- Freight and Incoterm
- Payment and hedging terms
- Quality certificates and rejection policy
How it works in SourcingHub
Choose the category — Raw Materials — and SourcingHub loads the should-cost analysis template pre-tuned for it.
A 5-minute guided brief captures scope, volume and constraints. AI fills the blanks with category benchmarks.
Download the should-cost analysis as Word or Excel, or send it directly to suppliers from SourcingHub.
Frequently asked
The essentials for raw materials: current price, volume, and the drivers listed above (Material grade, spec and tolerances, Annual volume and delivery cadence, Index / benchmark reference (LME, CRU, Platts)). If you don't have every input, the model uses category benchmarks and flags each assumption.
No — the same logic (cost drivers × utilization × margin) works for services and indirect spend. In raw materials, the drivers just shift from raw materials to labor rates, capacity, and pass-through costs.
Within ±5–10% of the supplier's own cost stack is enough to negotiate. The value comes from the conversation the model unlocks, not decimal-precise cost accounting.
Yes. Exports come in a clean executive format (PDF or Excel), and you can share redacted drivers or the full stack depending on your negotiation strategy.
Run your Raw Materials should-cost analysis now
Free to start. No credit card. Every account gets should-cost analysis generation, side-by-side comparisons and executive-ready exports.
Run this should-cost