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Estimation of Target Selling Price in New Product Development

Minis, I., Kourounis, T.
Proc. of the 2006 ASME International Design Engineering Technical Conferences & Computers in Engineering Conference, September 10-13, 2006.

This paper proposes a systematic way of estimating the target selling price of a new product, at the early design stages of its development. The main objective of the method is to establish a robust price estimate strictly according to the market perspective. Based on concepts inspired by House of Quality, the proposed method uses the customer requirements (CR), as well as the perceived satisfaction of each CR, and estimates the selling price based on the price of competitive products. Using this price estimate and subtracting profit and overheads, the product target cost (material and labor) can be estimated, providing a critical input to the new product development team. The research focuses on simple assemblies, an area in which target costing is not yet widely used.