The difference between the gross margin and the market price is the target cost for a new product.

Question

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The target cost is the desired cost of a product, which is typically set below the market price to ensure profitability. The gross margin is the difference between the selling price and the cost of goods sold, so the difference between the gross margin and the market price is the amount that the company can afford to spend on the product.

The Difference Between the Gross Margin and the Market Price