Value-Engineering: Priced E-bike
Updated: Apr 8, 2021
This week, I'm thinking about Value-Engineering in Product Design.
Value Engineering (VE) is the ratio of Function to Cost.
Increasing Function or Lowering Costs are both valid methods of increasing Value to the customer. But sometimes, increasing both Function and Cost is appropriate.
Imagine for a minute, that "Bob" is looking for a fun way to get outside. He sees other people riding a bike. He thinks he might like to ride a bike.
Bob doesn't want a bicycle, but he wants the experience that the bicycle can give him.
He wants to experience riding around the lake with the wind at his back
OPTION 1: Bob finds a new bike at his local bike shop for $1000. The bike is decked out. It has all the options. It's a really good price.
OPTION 2: Bob finds a similar bike at the bike shop for $500. The bike is a base model, without any options. It's an entry-level bike.
OPTION 3: Bob searches his local Craigslist and finds a bike for $500. He stops by to look it over and finds out that it's the same premium bike that he saw at the store. Brand new in box, never ridden.
OPTION 4: Bob finds a used, functional e-bike for $1500
Let's discuss the value that Bob sees in each option:
Bob decides that it's a regular bike that he really wants. He inherently trusts the bicycle dealer, and he wants the security of the one-year warranty.
Bob wants to reduce cost, and is willing to sacrifice functionality to keep some cash in his pocket. He inherently trusts the bicycle dealer, and he wants the security of the one-year warranty.
Bob wants to reduce cost, and is willing to take on some risk to keep some cash in his pocket.
Bob realizes that if he spends a bit more, he can get something to provide a much better riding experience.
Many times our design efforts are hyper-focused on removing functionality to reduce cost.
In some cases we could increase functionality and increase cost to add more value to the end customer.
Sometimes the higher-priced option is the better value.
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