Price Benchmarking is a critical strategic tool used in procurement to evaluate and compare the prices of goods and services against industry standards, competitors, or historical data. Its primary objective is to ensure that an organization is paying competitive rates, thereby optimizing cost efficiency without compromising quality or value.

In procurement, price benchmarking involves systematically collecting data from various sources such as supplier quotes, industry reports, market intelligence databases, and internal historical records. This data is analyzed to identify pricing trends, cost drivers, and variances that can impact procurement decisions. By understanding these factors, procurement professionals can negotiate more effectively, achieve cost savings, and foster better supplier relationships.