Target Costing

A target cost is calculated by subtracting the desired profit margin from an estimated or market-based price to arrive at a desired production, engineering, or marketing cost. This may not be the initial production cost, but one expected to be achieved during the mature production stage. Target costing is a method used in the analysis of productSomething that has been or is being produced. design that involves estimated a target cost, then designing the product/service to meet that cost.