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Price optimization utilizes data analysis to predict the behavior of potential buyers to different prices of a product or service. Depending on the type of methodology being implemented, the analysis may leverage survey data (e.g. such as in a conjoint pricing analysis [7]) or raw data (e.g. such as in a behavioral analysis leveraging 'big data' [8] [9]).
Pricing a product based on the value the product has for the customer and not on its costs of production or any other factor. This pricing strategy is frequently used where the value to the customer is many times the cost of producing the item or service.
Product cost management (PCM) is a set of tools, processes, methods, and culture used by firms who develop and manufacture products to ensure that a product meets its profit (or cost) target. Scope [ edit ]
Production optimization is the practice of making changes or adjustments to a product to make it more desirable. Description. A product has a number of attributes ...
Target costing is defined as "a disciplined process for determining and achieving a full-stream cost at which a proposed product with specified functionality, performance, and quality must be produced in order to generate the desired profitability at the product’s anticipated selling price over a specified period of time in the future."
Cost engineering is "the engineering practice devoted to the ... product or service. ... "Jelen's Cost and Optimization Engineering" 3rd Edition, McGraw-Hill, 1991. ...
However, moving the production line to a foreign location may cause unnecessary transportation costs. Close market locations for producing and selling products can improve demand optimization, but when the production cost is much higher, it is not a good choice.
Every decision in the product development process affects cost: design is typically considered to account for 70–80% of the final cost of a project such as an engineering project [1] or the construction of a building. [2] In the public sector, cost reduction programs can be used where income is reduced or to reduce debt levels. [3]