Is there a research that has established, e.g., a 'percentage-range' which can be used as the basis for estimating target cost? A reference/link to an article would be appreciated.
It will depend on the life of the product as well as reliability of the product
Dear Eliab,
Please clarify, do you want an estimate of market volume versus cost, (i.e. the price the market will support) or to compare different product designs at an early stage, ask the question what is the predicted cost difference between them? (i.e. so you can compare the cheapest solution)
Here is a reference that may interest you.
Riley, P.H., Saha, C., and Johnson, C.M., “Designing a Low-Cost, Electricity Generating Cooking Stove”, Technology and Society Magazine IEEE, summer 2010. Digital Object Identifier 10.1109/MTS.2010.937029, 1932-4529/10 ©2010IEEE.
Hope this helps
Paul
Target cost (of manufacture) should be based on the market pricing and volumes less shipping and sales costs, investment and profit. There are lots of variables here so it is wise to consider various scenarios, such as pricing vs. volume to maximise revenue.
Once you have established a target cost, then you need to cost manage the evolving design to meet the targets.
Dear Paul, many thanks for suggesting a reference. I actually would like to compare different product designs at an early stage.
Dear David and Saurin, thank you for answering this question. Much appreciated.
Many factors influence the target cost of an engineering consumer product. One such influencing factors is an introduction timing into the consumer market.
I have studies the influence of market timing on target costs. It is discussed in the following paper. Take a look...
Article Analysis of pricing strategies for new product introduction
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