What is a target price?

A target price is the amount the customer has in mind, or in the budget, for a part. Sometimes it is the current supplier's price, sometimes a cost calculation by purchasing, sometimes an estimate with nothing behind it. It comes with the request or surfaces in the first conversation. A target price is commercial information: it says where the customer wants to land, not what the part costs in your shop.

How does a target price work in practice?

Estimating towards the target means adjusting times or rates until the figure fits; post-calculation later shows what that cost. The defensible order runs the other way: your own cost line by line first, then look at where the gap lies. It can lie in your own route, such as different stock or fewer setups, or in something the customer can change: a tolerance that can open up, a larger quantity or call-offs, another finish, material the customer supplies. If that does not close the gap, a commercial decision remains: let the order go, or take it knowingly at a lower contribution.

What is a target price often confused with?

A target price is not a budgetary price: the target comes from the customer, the budgetary price from you. Nor is it a should-cost figure: that is a reasoned cost build-up the customer makes, the target price is only the number. And it is not the selling price, which you set from cost, margin and the market.

How do you see a target price in Blake?

In Blake the estimated cost per part sits at every quantity in the quantity breaks, built up from lines for material, machining, finishing, setup and programming. Then you see line by line where the gap to the target price arises. More on estimating.