Cost efficiency and cost reduction management are very important parts of the strategic management process.

The target retail price also comprises of minimum profit margin.

When you set up a retail/sale price, it already includes customer expectations, demands, and product design.Cost reduction is the difference between the current market cost and the target cost that you’ve planned to achieve.The market environment decides the retail of your product/service here you take price instead of making it.It happens often that businesses manage to deliver better products and services while reducing the cost, and customers would relish the optimum product at a lower price. It makes companies supply value-added services to the product for the benefit of customers.It allows companies and businesses to earn a higher profit margin by lowering the production cost because they’ve already fixed the cost price.It’s a dynamic pricing method that focuses on the factors that impact the demand of the product while finding out the asking price of the market.Some of the main advantages of the target pricing strategy are as follows Also Read: Stability Strategy – Definition, Types and Examples Advantages of Target Pricing

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