In recent years, equipment and material prices of power grid projects have been varied a lot, especially for AC transformers that have large influence on substation project costs, which makes the cost control of grid projects more difficult. Based on the principle that input parameters are measurable, available and open, and since price is determined by value and changed with cost, the price constitution of transformers are studied to build a cost analysis model of AC transformer. Thus it will be realized that with giving some industrial public data of main raw material prices and basic financial data, the cost of AC transformer can be estimated quickly, which can provide scientific support for the bidding bull’s-eye prices and price forecasting in power grid enterprises, as well as improve the accuracy of equipment price estimation in substation project budget.