Target price
Encyclopedia
Target price may mean different things:
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Target price (Stock Market)
In the Stock Market, target prices are created by stock market analysts and the term itself can refer to a number of things. It can refer to the highest price that an analyst thinks a stock will reach in a given year. It can also refer to the price at which an analyst believes it will have reached its highest value potential. Usually this rating translates to the price at which the analyst would be willing to sell the stock. In most cases, analysts who cover a given stock for which they have created a target price will include a time frame; typically one year from the time of the report.
To produce a target price an analyst will take into consideration earnings, earnings potential, historical trends in industry and sub-industry groups, as well as various valuation metrics such as P/E ratio
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Target price (Sales and Manufacturing) is the price at which a seller projects that a buyer will buy a product. This projection is reached by market research and calculating the cost to market of the product. In turn, the target price may be used to calculate the target cost for a product.
The easiest measure of target price is to compare the product with similar products of its kind. Sometimes, these may be products sold by the competitor. If one's product is unique in the market, one must rely on market research or even entrepreneurial instincts to determine the target price.
In manufacturing, the target price may be used to calculate the target cost. This is the maximum cost that the seller is willing to pay to have the product manufactured. When the actual cost of manufacturing increases beyond the target cost, it may no longer be profitable for the seller to sell the product. Simply increasing the sales price to cover for the increase in overhead would increase the actual sales price over the intended target price. This may cause lower sales than expected, leading to a loss larger than the increase in overhead.
The target price for any product should be reviewed periodically, as market conditions change. Inflation
plays a key role as time progresses. As the cost of fuel and labor increase, the manufacturer may not be able to meet the target cost. The seller, if he/she wishes to continue the sales of the product, must increase the sales price to reflect the higher cost to market. But, as the cost of living increases, consumers may be more or less willing to purchase the same product at a price higher than the initial target price. In order to downplay the price increase to the consumers, sellers and manufacturers may utilize transition tactics such as redesigning, resizing, repackaging, and reviving.
- The price at which a stockholder is willing to sell his/her stock.
- The price at which a seller projects that a buyer will buy a product.
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Target price (Stock Market)
In the Stock Market, target prices are created by stock market analysts and the term itself can refer to a number of things. It can refer to the highest price that an analyst thinks a stock will reach in a given year. It can also refer to the price at which an analyst believes it will have reached its highest value potential. Usually this rating translates to the price at which the analyst would be willing to sell the stock. In most cases, analysts who cover a given stock for which they have created a target price will include a time frame; typically one year from the time of the report.
To produce a target price an analyst will take into consideration earnings, earnings potential, historical trends in industry and sub-industry groups, as well as various valuation metrics such as P/E ratio
P/E ratio
The P/E ratio of a stock is a measure of the price paid for a share relative to the annual net income or profit earned by the firm per share...
.
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Target price (Sales and Manufacturing) is the price at which a seller projects that a buyer will buy a product. This projection is reached by market research and calculating the cost to market of the product. In turn, the target price may be used to calculate the target cost for a product.
The easiest measure of target price is to compare the product with similar products of its kind. Sometimes, these may be products sold by the competitor. If one's product is unique in the market, one must rely on market research or even entrepreneurial instincts to determine the target price.
In manufacturing, the target price may be used to calculate the target cost. This is the maximum cost that the seller is willing to pay to have the product manufactured. When the actual cost of manufacturing increases beyond the target cost, it may no longer be profitable for the seller to sell the product. Simply increasing the sales price to cover for the increase in overhead would increase the actual sales price over the intended target price. This may cause lower sales than expected, leading to a loss larger than the increase in overhead.
The target price for any product should be reviewed periodically, as market conditions change. Inflation
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
plays a key role as time progresses. As the cost of fuel and labor increase, the manufacturer may not be able to meet the target cost. The seller, if he/she wishes to continue the sales of the product, must increase the sales price to reflect the higher cost to market. But, as the cost of living increases, consumers may be more or less willing to purchase the same product at a price higher than the initial target price. In order to downplay the price increase to the consumers, sellers and manufacturers may utilize transition tactics such as redesigning, resizing, repackaging, and reviving.