Target cost accounting

Also known as: retrograde calculation, target costing, target pricing

Bei der Zielkostenrechnung, auch Target costing genannt, handelt es sich um eine rückwärtsgerichtete Kalkulationsmethode, welche die Frage beantwortet: Was darf das Produkt am Ende kosten? So kann schon in der Entwicklungsphase durch Kostenvorgaben Einfluss auf den Preis genommen werden.

Retrograde calculation and cost control

When calculating target costs, the calculation is retrograde (backwards or backwards). A competitive market price is determined after market research. The desired profit is deducted from this market price and the maximum permissible costs are obtained.

These permitted costs are compared with the standard costs in the company. The next step is not to turn the price screw in order to achieve the desired result, but rather the cost screw.

Target costing phases

  • Target cost setting
  • Split target costs
  • Target cost achievement

Target cost setting - The target cost will be over the entire Product life cycle determined, both corporate strategy and market situation play a major role.

Split target costs - In the phase of target cost split, the total target costs are aggregated, i.e. broken down to a certain level, for example the component or functional level, so that they can then be coordinated and achieved much more effectively.

Target cost achievement - Through various measures, for example improvements in the production process or a reduction in the fixed general costs, the costs are reduced to such an extent that the target costs are ultimately achieved.

Advantages and disadvantages of target costing

The advantages include a strong market orientation, especially customer, supplier and competitor orientation, already in the development phase.

Target costing is a dynamic process that requires constant review. Concrete market requirements improve employee motivation, since corporate goals are not controlled with the help of abstract "top-down" goals, but with the help of specific market requirements.

Especially with radicals Product innovations However, target costing appears to be very difficult, as it is questionable whether an exact market price can be determined in advance.

In practice, it is also often difficult to identify customer preferences in advance, so that it is difficult to determine the market price.

The process of target cost accounting can often not be supported by ongoing cost accounting. Case-by-case analyzes, such as accompanying process cost studies, require a greater amount of work.


  • Target costing is a backward-looking calculation method
  • not equally suitable for every company or every product
  • Target costing is a useful cost accounting tool when there is high price pressure or profit targets
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