How  to  compete on price  
without sacrificing profits.

THE ASSURED WAY: Do everything on this site to develop low-cost products, concurrent engineering of flexible processes, build-to-order of product families and flexible processes, and shortening order fulfillment times while reducing inventory costs.  If this is not forthcoming, read on:

The foundation for lowering prices while improving profits is quantifying all costs. Not doing that leads to following consequences if  “cost” is predominantly part cost, which encourages cheap parts and low-bid vendors, which raise overhead costs because:

- Cheap parts and low bid vendors raise quality costs and delay the introduction.

- Changing parts costs money to try and introducers risks to the exponent of the number of changes.

- non-standard parts are hard to get, complicates supply chain, delay order fulfillment, and raise inventory costs.

And all this raises the selling prices of “cost reduced” products.

If overhead costs are not broken down, they will rain down on all products and thus raise the selling prices of your cash cows and even well-products designed for low cost to pay for counter-productive cost reduction attempts (above) and continuing to sell hard-to-build products.

Thus, averaging overhead costs raises prices of your best products


Prioritization: A quick and easy way to lower overhead costs without any change orders is to  stop selling high-overhead products and customizations  so that their excess overhead costs will no longer be taxing the well-designed products.  Eliminating the "loser tax" by eliminating hard-to-build products is the goal of Product Line Rationalization.   That article shows how focusing on the 20% of your products that generate 80% of sales (Pareto's Law) can immediately triple profits!  -- Just by dropping the worst 20% of your sales, which will be replaced when the rest of your products can sell for less and when the resources that were wasted on fire-drill products will be able to focus on designing low-cost products.

Case  Study:  An  industrial  products  company  had  a  30% price  price   disadvantage from a "taking all orders."   

Neither the engineers or managers could figure out why a competitor's product sold for thirty percent less until they realized that the competitor built only its newest, best product whereas this company was still "taking all orders" and selling all its legacy products.

The   proactive  solution  is  Product  Line  Raization  ,  which   is  presented  in Appendix A  in  all additions  of  the DFM  book.   


Material Overhead:  Another way to immediately lower prices of your best products  without change-orders   is to assign standard parts a lower material overhead, which reflects real costs and also encouraged more standardization.

In all of Dr. Anderson’s classes, the Procurement manager surveyed said that standard parts take an average of 1/10 of Procurement resources. Therefore, the material overhead charge for standard parts should be 1/10 of the hard-to-get products. Since well-designed products, by definition, use more standard parts, their overhead costs will be reduced by this simple computational change.  See the third paragraph in Chapter 5 (Standardization) in the book, Design for Manufacturability.


Achieve  major cost reductions with just a few resources with Backward-Comparable “Drop-in” Replacements, e.g for sub-assemblies like hard-to-build frames and structures  This can  save a lot of money now replacing hard-to-build, high-skill versions, both on existing products and then become the foundation of new generation product developmentsSee: 


New: The Most Advanced Product Development Course
by the author of all 50 DFM article in this site


7 Reasons Why Cost Reduction After Design Doesn’t Work

Counter-productive policies that raise prices and lower profits

How Vendor-Partnerships Can Save More Money Than Low-Bidding

Standardization improves Order Fulfillment while simplifying supply chains, and enables Platform Development

Prioritized Resources will focus on the highest profit resources instead of “taking all orders” that raise overhead costs and waste valuable resources

Easy ways to Impalement Total Cost which as the opening paragraph above says
is the foundation for lowering prices while improving profits


Cost reduction on existing products, without the above risks, are possible to  greatly reduce cost, skill demands, and lead times: backward-compatible drop-in replacement that offer short-term cost savings on the current product and then become the foundation for subsequent products.  One example is Dr. Anderson's Steel and Cost workshop, for frames and strictures for machinery and large vehicles is described at:,  which shows many generic examples of low-cost machine frame replacements.

Copyright © 2022 by David M. Anderson


All of these principles on DFM can be included in
customized class and workshop on DFM or
the  Most Effective Product Development class 


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