Allowances and charges are the actual financial numbers present in a supplier proposal and are labeled as such. All components of a price model, which result in a reduction or addition to a basic price, can be united to a model of allowances and charges. By way of explanation, it is sufficient to specify the type or reason for the allowance and⁄or charge. All such allowances and charges will be included in proposals and therefore do not have to be generated or researched. The pricing analyst must incorporate allowances and charges into the price model. However, it is recommended that the pricing analyst obtain clear and definite explanations from the supplier regarding allowances and charges to ensure accuracy of the price model.
