BUSI 3008 Lecture Notes - Lecture 6: Whole-Life Cost, Target Costing, Deflation
6 Dec 2016
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Document Summary
Short-run pricing decisions less than 1 year. Long-run pricing decisions 1 year or longer. Pricing a product in a major market. Use in competitive markets or less competitive. Market based base the price on customer wants and competitors reactions. Cost based base the price on what it costs to produce and to achieve a required rate of return. Cost-pluc pricing target progit percentage is added to the full product cost. Life-cycle pricing includes environmental costs of production, reclamation, recycling, and reuse of. Target pricing based on what customers are willing to pay materials. Value engineering managers must distinguish value-added activities and costs from non-value-added activities and costs. Value-added costs a cost that, if eliminated, would reduce the actual or perceived value. Non-value-added costs a cost that, if eliminated, would not reduce the actual or perceived value. 1 could compromise product specifications and result in poor product design. May miss opportunities because development time is typically longer.
