Methodological considerations on the process of determining the target cost

Target costing is a disciplined process which uses data and information into a logic series of a few steps to determine and achieve the target cost of the product. The price and cost are established for a certain functionality of the product, which is determined by understanding the requirements of customers and their will to pay for each function. In this complex environment, it is the role of the target costing method to achieve the balance between these external variables and to help the development of a product at a cost that matches these contraints. An important activity is to establish the customers' requirements, which aims to obtain certain information from the customer about the product, to use an initial concept of the product to determine prerequisites and continue to collect data from customers by improving the original project, to see if they match their requirements.