The target costing model is a method used by a business to determine the required manufacturing product cost necessary to achieve a given gross margin percentage based on a market driven selling price.
When a business raises or lowers the selling price of its products the unit sales volume of the product changes.
This free pricing for profit calculator can be used to calculate the increase in unit sales volume needed to compensate for a change in selling prices while maintaining a constant gross profit level.
Business plan financial projections usually start with a projection of revenue based on the number of units sold multiplied by the selling price per unit. In order to produce the revenue projection, the business first needs to establish its product selling price, which is achieved using one of the following three pricing models