Don’t Reduce Price- Design a Product Your Customer can Afford

[1]R.A. Mashelkar: Breakthrough designs for ultra-low-cost products, Retrieved 11/11/2010 from  TED- Ideas Worth Spreading http://www.ted.com/talks/r_a_mashelkar_breakthrough_designs_for_ultra_low_cost_products.html

75% of total expenditures are in the hands of operational engineers. These people make millions of the decisions that go into an aircraft, at the level of using a screw versus using a weld versus creating some new type of fastener for a particular purpose.  These are very bright people but they typically don’t have access to the information they would need to make the best decision, and answer the question– what is the simplest answer that meets the requirements and offers the lowest cost? Although these principles can bring improvements anywhere in the  development cycle, some of the most dramatic results come from  beginning  - using product development with a target cost as a design parameter. In one celebrated example, building and fitting a functional prosthetic foot for an amputee has traditionally cost tens of thousands of dollars.   That cost was brought down to $28 by a team of innovative engineers that used “impossibly” low cost as a primary design consideration of a new prosthesis and fitting process. How can you use this idea in your own business?   Even if you’re not in aerospace engineering (Alexandre’s target market) you can use this concept. Address customer objections with product design rather than with pricing. Simply reducing the price can damage the perceived value of your product or cut your margins to dangerous levels which might get your company into financial trouble. A better idea—design a product that meets the cost parameter. Determine the requirements that are absolutely vital at a cost that is acceptable. Using ABCI as an example—we know from consultations with clients that not everyone can afford our consulting services, but many can benefit from great marketing advice at a more modest cost. We now have the Flight Plan to Sales Success book, and the Aviation Marketing Master Class to serve those clients. They get the benefit they need at a price that fits their budget..