Understanding cost structures and cost-drivers – LU 22
(cost structures)

The cost of complex goods can be very high, and buyers can be very price sensitive. They would like to know the price of the goods and services they buy, the cost of implementation and all the cost related to usage. The salesman must be able to give the buyer correct information on these costs, has to demonstrate the effect of different decisions on total costs.

He has to understand both the buyer’s and his own company’s cost structure and cost drivers to make or to recommend decisions on prices of different product-service combinations. He must know how different costs behave, how they influence margins