Rationalizing real estate pricing decisions through target costing: a qualitative analysis of off-plan sales

This study explored the role of the Target Costing (TC) Method in rationalizing the housing unit pricing decision in a real estate development company in Saudi Arabia. Specifically, this study aimed to understand how target costing rationalized a company’s pricing decision following the pursuance of an off-plan sales option. Drawing on the Institutional Logic Perspective, this qualitative case study examined the role of, and response towards, the TC method in the housing unit pricing decision-making process in a real estate company. Apart from observations and documentary reviews, the data sources for this study were collected through 25 semi-structured interviews with 16 key informants. The study provided deeper insights into how TC has been adopted in a real estate development company by illustrating the changes brought about by the off-plan sales option. It suggested the existence of multiple logics, namely cost-driven and market-driven logics, which influenced organizational actors’ actions in adopting TC. This study contributes to the accounting literature by explaining how a company rationalizes the housing unit pricing decision through the TC method to remain competitive. It also guides policymakers to adjust tax incentives and regulatory measures for greater cost transparency that promotes housing affordability and market sustainability.