Work out price benchmarking index instantly with clear inputs, formula shown and shareable results.
A price index of 100 means you pay the benchmark median. Converting the gap into an annual value at your volume is what turns a benchmarking observation into a business case, and the lower-quartile gap sets the stretch target for a sourcing event.
Price index
Index = Your price / Benchmark median x 100
Annual gap
Gap = (Your price - Benchmark price) x Annual volume
Very. Specification, volume, lead time, payment terms and service level all move price, so an unadjusted benchmark overstates the opportunity.
As a stretch, yes, but only if you can match the conditions that lower-quartile buyers accept — usually larger volumes and fewer variants.