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5 Examples of Target Costing

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Target costing is product development that adopts a cost target as a primary goal or constraint. The following are illustrative examples.

Cost Competition

A highly competitive industry such as solar energy where ability to cut costs to make products cheaper is key to survival as a firm. Costs considered include the entire lifecycle of solar panels including manufacturing, delivery, installation, operation and recycling.

Backward Invention

Creating a striped-down version of a successful product to introduce it to a developing market at a lower price point.


Developing tools to improve quality of life and/or the environment that has to be scaled at a low cost.


A building project has a fixed $12 million budget. The client also has over 120 requirements that are expected to be met for that price. Construction firms bid for the contract with each explaining how it can fulfill the requirements for the price.

Price Points

A fashion company finds that shoes sell well at a certain price point. The firm also expects 50% margins. These two factors place firm cost constraints on fashion designers at the firm.
Overview: Target Costing
Product development that has a specific cost as a firm goal or constraint.
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Product Development

This is the complete list of articles we have written about product development.
Brand Development
Competitor Analysis
Critical To Customer
Customer Analysis
Customer Needs
Design Considerations
Design Principles
Design To Value
Early Adopters
Feasibility Study
Figure Of Merit
Latent Need
Market Fit
Market Research
Moment Of Truth
Naive Design
Packaging Design
Product Analysis
Product Culture
Product Design
Product Functions
Product Marketing
Product Metrics
Product Planning
Product SWOT
Proof Of Concept
Sensory Analysis
Social Features
Target Market
Time To Market
More ...
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