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.