What will your design cost to produce?

11/06/2012

As a design engineer, you are under tremendous pressure to create quality products that differentiate your company. You have requirements for form, fit, and function, and you also have a schedule to keep. Of course, your company is under tremendous pressure too, especially in this economic environment. Profit margins are tight and budgets are even tighter.

In the never-ending battle for market-leadership, design engineers play a larger role than they may realize in determining a company's success. But, it's not just about which company has the best products; it's also about which company does a better job of controlling its product costs.

For manufacturing and product companies, the biggest expense on the quarterly income statement is Cost of Goods Sold, or COGS. COGS is the amount of money required for producing the goods your company sells. Typically, the number is between 70 and 90% of the gross revenue your company earns. Because COGS in manufacturing is so high, a company that reduces its product costs by just 1% would see its profit rise substantially.
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