BUSINESS ADMINISTRATION
ACCOUNTING FOR MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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price = cost + a fair share of profit
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the price a competitor sets
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Detailed explanation-1: -Target pricing is a strategy that businesses use to establish the maximum cost of the product or service they’re offering. Companies make an initial decision on a competitive price by studying the market and comparing the prices of similar products. They can then factor in their profit margin.
Detailed explanation-2: -Meaning of Target Price Target Price is referred as the best possible projected price limit for a financial security. Target Price is a limit that is the best possible outcome for the stockholder’s investment.
Detailed explanation-3: -Competitive Based Pricing (or Competition Based Pricing) is a pricing model where your price points are heavily influenced by those of your competitors. This approach focuses outwardly on the market, rather than inwardly on your costs (Cost Plus Pricing).
Detailed explanation-4: -How to Calculate Target Cost. In order to establish proper cost targets, you need first to establish a market price, then subtract the amount you want to make for your potential profit. The difference is the target cost for the product: the “whole” or “total product cost.”
Detailed explanation-5: -Competitive pricing. Set a price based on what the competition charges.