Design to cost vs. Design to value

20.03.2019

These two terms are speaking about daily issues of all businesses regardless the size.

Design to cost (DTC): It starts from the very beginning stage of designing a product. It focuses on the entire cost of designing and producing the product or service pipeline. Obviously, there is a target for it assigned by CFO or board members based on realities and engineering calculations.

Design to value (DTV): All necessary considerations in designing a product to maximize the value for customers and clients.There are certain methods to reduce the cost such as using less expensive raw materials, smartly revising processes for cheaper operation without touching quality and etc. But as the big picture and traditionally the more you invest, the more your final price jumps higher and consequently the value presents the price. This is a true story about most of luxurious services and products.

Now we should figure of how we can balance these two strategies.

Should we only focus on design to cost or should we fly in delivering high values without considering customer buying power?

Difficult to decide! Right? I would suggest the following solutions:

When it comes to DTC:

A) From the very begging involve your designers and R&D teams with cost and finance.

B) Always conduct some cost innovation campaigns with great incentives. Let your people suggest for cheaper innovative solutions and share the cost reduction with a transparent method with them.

C) Make your engineers, designers, producers more familiar with finance. It's been for years that there are courses such as Finance for non -finance people and still the topic is valid!

D) This is a separate topic to be discussed later but from the very beginning of production stage consider to involve your quality people to:

1. Keep the level of quality
2. Save huge amount of cost and time by avoiding rework as a killer to production.

When it comes to DTV:

A) Do deep Market study: Don't get over excited by pushing it!

B) Users all over the world buy products and services as solutions to their problems. Keep this approach in delivering the value. Give them permanent and effective solutions and they will be following you in return no matter what!

C) Make the value bold by creating big differences: When it comes to competition show your customers/clients that you care more. It can be more years of warranty by assuring them about the quality or it can be easily a better channel of communication way when it comes to complaints to assure them that your ears are turned toward them ; -)

D) Measure the satisfaction! A simple email, call or message to get the feedback is very important. Make your people to do "Thank you call" even if your customer/client is silent.

There is no single percentage when it comes to giving weight to these two strategies. They are both important but what makes one more important than the other one is MARKET EXPECTATION and the TARGET MARKET. If these two items are not clear for you yet, you would better not to design any product/service! As simple as that.