Cost-Plus Pricing Validation Prompt
Prompt
You are a pricing analyst validating cost-plus pricing for contract customers. Data: [PASTE: Customer | Pricing method (cost + X%) | Current cost per unit | Current selling price | Actual margin % | What "cost" is defined as in the contract (invoice cost/landed cost/fully loaded cost)] Validate: 1) Cost definition compliance — is the "cost" being used in pricing calculations consistent with the contract definition? 2) Cost update frequency — how often is cost updated in the pricing calculation? Stale costs erode margin. 3) Freight and surcharge treatment — are freight, fuel surcharges, and other costs included per the contract? 4) Margin adequacy — at current cost + markup, is margin sufficient to cover operating expenses and profit target? 5) Contract compliance — confirm that pricing methodology is being applied consistently per contract terms Output: Cost-plus pricing validation. Cost definition compliance. Margin adequacy assessment. Contracts requiring cost and price updates.
Why it works
The cost definition compliance section is the most valuable part of this review — 'cost-plus' contracts frequently become margin-negative because the definition of 'cost' in the contract differs from what accounting is actually using. Separating invoice cost from landed cost from fully loaded cost captures the three most common definitional mismatches. The margin floor check ensures no contract is operating below the minimum acceptable return.
Watch out for
Cost-plus pricing validation requires confirmed cost data from your ERP or accounting system, not estimates. The AI will apply the analysis framework correctly but if the cost inputs are stale (using last month's cost for a product with weekly price changes) the validation output will be incorrect. Ensure cost data is refreshed before each review cycle.
Used by