Cost reduction

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Cost reduction is the process used by companies to reduce their costs and increase their profits. Depending on a company’s services or products, the strategies can vary. Every decision in the product development process affects cost: design is typically considered to account for 70 - 80% of the final cost of a project such as an engineering project [1] or the construction of a building.[2]

Companies typically launch a new product without focusing too much on cost. Cost becomes more important when competition increases and price becomes a differentiator in the market.

The importance of cost reduction in relation to other strategic business goals is often debated.[3]

Cost reduction strategies[edit]


  1. ^ Barton, J. A. et al., Design determines 70% of cost? A review of implications for design evaluation, Journal of Engineering Design, Volume 12, published 1 March 2001]
  2. ^ Designing Buildings Wiki, Cost control in building design and construction, last updated 15 August 2021, accessed 11 September 2021
  3. ^ Green, W., Growth trumps cost cutting, says survey, Supply Management, published 31 January 2018, accessed 12 September 2021
  4. ^ Turney, P., Activity-Based Costing: A Tool for Manufacturing Excellence, Association for Manufacturing Excellence, published summer 1989, accessed 13 September 2021
  5. ^ High, P., AstraZeneca CIO Makes IT Twice As Good At Half The Cost - Here Is How,, published 3 January 2017, accessed 10 January 2021

Further reading[edit]

  • Barrett R. Crane. "Cycle time & cost reduction in a low volume manufacturing environment". MIT DSpace. hdl:1721.1/11020.
  • Apichart Jearasatit. "Using a total landed cost model to foster global logistics strategy in the electronics industry". MIT DSpace. hdl:1721.1/60836.
  • Bryan K. Parks. "Cost and lead time reduction in the manufacture of injection molding tools". MIT DSpace. hdl:1721.1/12092.

See also[edit]