Design-to-cost (DTC) is a product- and system-development approach that treats an explicit cost objective as a design requirement. A team defines what the target includes, then weighs design choices against that target alongside required performance, schedule, technical feasibility, and risk. It matters because early design decisions can shape later costs—and a product that meets its purchase-price target may still be expensive to operate or maintain.
What is design-to-cost?
In design-to-cost, cost is considered while a product or system is being designed, rather than only after a design is settled. The team sets a cost objective, estimates the likely cost of alternatives, and adjusts requirements or design choices as needed to pursue the objective without losing sight of the outcome the product must deliver.
The phrase is incomplete unless the cost basis is specified. A unit production target, an acquisition-cost cap, and a whole-life cost objective measure different things. A historical aerospace definition describes the approach as “selecting a unit cost goal and developing a product with that goal as a principal design parameter,” while also noting that the meaning of “cost” can be ambiguous. A Return to Basics
Design-to-cost is not cost cutting at any price
The goal is not to minimize spending regardless of consequences. Teams compare cost with required effectiveness, reliability, schedule, and technical risk. A design that appears cheaper because it no longer meets a necessary performance or safety requirement has not achieved a sound cost objective.
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- ISBN: 9781260566437 is an International Student Edition of Product Design and Development 7th Edition by: Karl Ulrich and Steven Eppinger and Maria C. Yang. This ISBN: 9781260566437 is Textbook only. It will not come with online access code. Online Access code (should only be purchased when required by an instructor ) sold separately at other ISBN The content of of this title on all formats are the same.
- ISBN: 9781260566437 is an International Student Edition of Product Design and Development 7th Edition by: Karl Ulrich and Steven Eppinger and Maria C. Yang. This ISBN: 9781260566437 is Textbook only. It will not come with online access code. Online Access code (should only be purchased when required by an instructor ) sold separately at other ISBN The content of of this title on all formats are the same.
Why does design-to-cost matter?
Choices about architecture, materials, components, and how a system will be operated can affect later costs. Considering cost while options are still open gives teams a chance to compare alternatives before decisions constrain the design. NASA describes systems-engineering analysis as having especially dramatic effects in early stages, while noting that cost-related decisions remain amenable to analysis later in a system’s life. NASA Program/Project Life Cycle
A low initial price does not necessarily mean a low total cost. For a product or system that must be operated, maintained, or eventually disposed of, choices made to reduce acquisition or production cost may affect those later expenses. DTC makes the chosen cost objective explicit so decision-makers can see what they are optimizing—and what may fall outside the target.
Historical evidence illustrates the risk of vague or late cost goals, but should not be mistaken for a description of present-day practice. A 1978 U.S. Government Accountability Office review of four Defense programs found that targets had not been established during concept formulation, when design flexibility was greatest; that attention leaned toward near-term acquisition cost rather than life-cycle cost; and that cost data needed for cost-performance estimating relationships were lacking. Those findings concern the programs reviewed in that report, not current industry-wide performance. GAO, Design-to-Cost: A Means to Control the Cost of Weapon Systems
How do you set a design-to-cost target?
A useful process begins by stating the intended outcome and the cost basis, then carries that basis consistently through estimates and design comparisons. The following is a practical synthesis of engineering and cost guidance, not a universal mandated sequence.
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- Define the outcome and cost basis. Specify what the product must do and whether the target concerns unit cost, production cost, acquisition cost, or life-cycle cost. State which expenses are included and the estimate assumptions.
- Set the objective while options remain open. Establish an affordability or cost objective early enough to inform concept and architecture choices, rather than treating it as a check after major decisions have been made.
- Build an estimate and identify cost drivers. Use traceable assumptions and suitable cost-estimating models or data. A single estimate without its basis or uncertainty is not enough to judge whether a proposed design change supports the target.
- Develop feasible alternatives. Identify candidate designs that could meet the required outcome, and assess what each implies for cost, performance, schedule, technical feasibility, and risk.
- Compare like with like and select a design. Use consistent assumptions across alternatives, including relevant operating, maintenance, reliability, and disposal implications. Select and refine the option that best balances the project’s objectives and constraints.
- Update estimates as the design changes. Track changes against the target and revisit the estimate when requirements, assumptions, or the design evolve.
NASA’s systems-engineering guidance describes design-solution definition as developing alternatives and evaluating them through detailed trade studies, including life-cycle cost. It frames the purpose of a trade study as moving architecture, intended operations, and design decisions toward the best solution achievable with available resources. NASA Systems Engineering Handbook: Design Solution Definition
What to compare between alternatives
- Cost basis, estimate assumptions, and uncertainty—including whether the comparison is acquisition-only or whole-life.
- Required performance and effectiveness.
- Development and delivery schedule.
- Technical feasibility and risk.
- Operations, maintenance, reliability, and disposal implications.
- Relevant cost and schedule margins or reserves.
What is the difference between design-to-cost and life-cycle costing?
They are related, but they answer different questions. Design-to-cost is an approach for using a cost objective to guide design choices. Life-cycle costing is a way to define or estimate costs across the system’s life. A DTC target may use a life-cycle cost basis, but it may instead focus on unit, production, or acquisition cost. The target’s stated basis determines which costs the design process is trying to control.
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NASA guidance describes life-cycle cost as covering phases such as design, development, verification, production, operations, maintenance, and disposal. If a project’s target includes only acquisition, it should not be described as life-cycle cost. NASA Cost Estimating
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.When should a design-to-cost target be set?
Set it during early concept work, when teams can still evaluate different architectures and requirements. A target introduced after those choices are largely fixed may still help guide later decisions, but it cannot restore options that the design has already ruled out. NASA guidance emphasizes both the strong influence of early systems-engineering analysis and the continued relevance of cost analysis later in a system’s life.
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What tools can support design-to-cost?
Teams may use cost-estimating models, activity-based costing, quality function deployment, concurrent engineering, and structured design trade studies. These are examples of methods discussed in a 1992 NASA report, not a current required checklist or a guarantee that any method will lower costs in every project. The appropriate tool depends on the product, available data, and decisions the team needs to compare. NASA, Design-to-Cost: A Review of the State of the Art
What does a cost target need to say?
A useful target states its scope, assumptions, and uncertainty—not just a dollar figure. NASA’s Cost Estimating Handbook Version 4.0 describes targets in terms of absolute values with a probability dimension and discusses threshold and objective costs. It includes a historical illustration: a $9 billion total-acquisition-cost target in CY 2013 dollars for the Crew Exploration Vehicle, including government and contractor expenses. This figure is an example from an older handbook, not a current estimate or recommended target. NASA Cost Estimating Handbook Version 4.0
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