Target costing

Target costing is deducting the desired profit margin from the price at which a product will sell, given its appeal and competitors' prices.

Definition

According to Marketing Management by Keller and Kotler (15th edition),

Target costing. Deducting the desired profit margin from the price at which a product will sell, given its appeal and competitors' prices.

According to Managerial Accounting by Braun, Tietz (5th edition),

Target costing. An approach to pricing used by pricetakers; target costing begins with the revenue at market price and subtracts the company's desired profit to arrive at the target total cost.