Page 10 - F5 Slides 2017-18
P. 10
Target Costing
Steps
1.Estimate a market driven selling price for a new product.
(E.g. to capture a required market share).
2.Reduce this figure by the firm’s required level of profit. (E.g.
based on target ROI).
3.Produce a target cost figure for product designers to meet.
4.Reduce costs to provide a product that meets that target
cost.
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