Traditional Pricing and Costing

Traditional pricing development typically starts with a basic product design developed in the research and development branch of a firm.this may be a design group,a research lab,and engineering team,or any other group of people in the company that is responsible for developing new products.

After the basic product design has been developed the price is typically found by adding all costs and a desired profit margin.if this prics is acceptable in the market is only experienced when the product is actually introduced and offered to potential customers. There are several reasons why a new product is introduced to the market at the wrong price.A product may be over-designed, i.e it offers more elaborate features than the customers want or uses far higher quality raw materials than the needed for the desired performance level.target costing attempts to address this issue by moving cost early into the product development phase.