Price and manage delivery risks — Education, training & research

By the end of this lesson, you will be able to calculate a price, test its return and address a delivery risk.

Common to all countries

Build the cost before choosing the price

Start with quantities, paid time, third-party costs and delivery assumptions. Include mobilisation, supervision, compliance, warranty or support, overhead and the end of the contract where relevant. Separate fixed costs from costs that vary with usage. Forecast volumes are not minimum orders unless the contract makes that commitment.

In this exercise, target margin means profit divided by selling price. A 20% margin therefore requires price = cost ÷ 0.80. Adding 20% to cost is a markup and produces a lower margin. Taxes, discounting and financing are excluded from these teaching sums; add the applicable items to a real bid. Test one credible adverse scenario and decide who controls its cause and how the contract allocates it.

Worked example — Train 80 staff in a new work process

This is a fictional teaching case. Quantities, prices and contractual conditions below are assumptions for the exercise, not legal requirements or market benchmarks.

A process change after materials approval requires revision and trainer preparation. Identify the content freeze, included updates and rescheduling rules. Four booked sessions do not guarantee four deliverable groups if staff availability is unknown.

Item	Cost (currency units)
Design and pilot	8,000
Delivery and assessment	8,000
Support and accessible materials	4,000
Total	20,000

Total cost is 20,000. To retain 20% of the selling price as profit, price is 20,000 ÷ 0.80 = 25,000. If “Content revision and trainer preparation” adds 2,000 to cost without a price increase, profit becomes 3,000, or 12% of price. Preserving 20% would require 27,500, only where the procurement permits that price. A cost increase does not automatically entitle the supplier to a contract price increase.

Country specific — what to verify

Check any required training-provider registration, qualification recognition, accessibility and learner-data rules. If children or vulnerable learners are involved, verify safeguarding responsibilities and evidence separately. Do not describe a non-accredited course as a regulated professional qualification.

Employment, funding conditions and research rights. Use the destination-country module and the actual tender pack. The sources below are references with their own scope; they do not form a single worldwide regime. For the general method, revisit the foundations.

Put it into practice

Calculate the price for 20% of selling price as profit, then add 2,000 to cost. Calculate profit at the unchanged price and write one risk-control action.

Model answer

Total cost is 20,000. To retain 20% of the selling price as profit, price is 20,000 ÷ 0.80 = 25,000. If “Content revision and trainer preparation” adds 2,000 to cost without a price increase, profit becomes 3,000, or 12% of price. Preserving 20% would require 27,500, only where the procurement permits that price. A cost increase does not automatically entitle the supplier to a contract price increase. A process change after materials approval requires revision and trainer preparation. Identify the content freeze, included updates and rescheduling rules. Four booked sessions do not guarantee four deliverable groups if staff availability is unknown.

Keep this worksheet in your working file. The quiz below checks the lesson’s decisions; passing it is neither a professional qualification nor a guarantee of an award.