TC involves subtracting a desired profit margin from the competitive market price.TC may be less than the initial product cost but will be achived in the mature stage.
Steps:-
- determine the adequate sales volume.
- set the selling price 2 achive the desired market share.
- estimate the required profit margin.
- TC= target selling price - target profit.
- estimate the cost based on the current design and the cost level
- TC Gap = estimated cost - target cost
- Close Gap
- negotiate with the customer before making the final decision.
- considers competitors price and how much is the customer willing 2 pay.
- design focus.
- reduces cost
- generate new idea of working, cost saving
- Due 2 characteristics of service and information requirements which is different, TC is hard 2 use.
- charcteristics are: intangiblity, simultanity, heteroginity, perishability, no transfer of ownership.
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