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Cost View/Enter screen

A variety of financial information can be entered to form a complete financial picture of the product so every member of the product team can be ‘working off the same page’.

Many other cost and profit elements can be entered, such as;

• initial or startup costs for manufacturing
• seasonal cost factors
• profit per unit of product
• time to manufacture each unit of product
• hours per week that the product is manufactured

The system will automatically calculate:

• Break even information
• Profit per unit, week, or any other time period
• Scenarios based on changes in profit or costs
• A visual ‘break even’ chart showing where the product
• breaks even for both initial costs and variable costs

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Break Even Chart

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Function screen list showing functions

Survey the customers of the product so they can rank the ‘Value Elements’ in importance to them.

The ‘Value Elements’ are ranked by the customers to show which ones are most important to them in terms of the ‘Value’ they receive from them.

This screen shows a simple ranking from most important (1) to least important (10) to the customer.

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function screen showing functions and rank

Next, we go back to the product cost list and use the ‘cost allocater’ to determine how much each ‘Value Element’ costs to provide. We go through the cost list and ‘allocate’ a percent of each cost out to the ‘Value Elements’ that the product provides. The result is a list showing how much it costs to provide each ‘Value Element’ or ‘Benefit’ to the customer

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Value Element list with the costs

Now we can compare how much it costs to provide each ‘Value Element’ to how much value the customer says they receive from each ‘Value Element’ that the product provides them.

We can identify ‘Value Elements’ that exhibit ‘value cost mismatches’.

• High cost to provide and low value to the customer
• Low cost to provide but high value to the customer

The highest cost ‘Value Elements’ usually have unnecessary costs that can be reduced

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function list showing cost and customer ranking

Now we know which value elements should be changed because their cost does not match the value the customer believes they get from them. We can easily track back to the product costs to identify which costs should be reduced. We can also investigate new ways to provide the targeted ‘Value Elements’ that will meet customer needs better while often costing less.

We would now want to:

• Brainstorm solutions for each target ‘Value Element’
• Describe and rank the solutions
• Choose best solutions to implement
• Implement solutions

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solutions screen with solution savings