What is the term used to describe how much a product should cost to make, determined during the product design phase?

The term that describes how much a product should cost to make, determined during the product design phase, is known as target cost. Target costing is a pricing strategy in which a company determines the desired profit margin and target price in advance of production. By subtracting the desired profit from the target price, the company establishes a target cost that must be met in order to maintain profitability while remaining competitive in the marketplace.

The concept is integral during the product design phase as it helps guide the design choices and materials used to ensure that the final product can be manufactured within budget while meeting required performance and quality standards. This approach encourages cross-functional collaboration between design, engineering, and production teams to ensure that cost efficiency is built into the product from the outset.