Let's adopt this type of global 'product-vs.-cost' assessment to the entire product life-cycle and call it WHOLE PRODUCT-LIFE COSTING.  This will include an assessment of all costs that are incurred by the producer in developing, producing, selling and supporting a product as well as the total costs the consumer incurs over the product's life-cycle.  However, we'll only be discussing those costs upon which the product development group has some influence through its development activities.  There are other corporate costs that are not associated specifically with product development, but these are beyond the scope of this article.

WHOLE PRODUCT-LIFE COSTING deals with the cost of the product over its total life; but, be aware that different uses of the same product may result in different life spans.  Thus, the cost of the various uses should be annualized to enable the costs to be properly compared.

From this viewpoint we can then determine which of these costs are influenced by the activities of PD.  These are the costs, then, that can (1) be minimized during PD without needing detailed consideration of the eventual values of the costs or (2) allowed by design to provide some level of control as the product is distributed, supported and changed during its lifetime.  Note that this effort means that there must be diligent scrutiny of the entire product plan (see Figure 1 below) to the best extent possible (without paralyzing the development efforts) prior to embarking on the design and development.

To help analyze the total expected costs, Figure 1 below outlines a very general life-cycle flow for a product from the producer's point-of-view (POV) and from the consumer's point-of-view; the figure is generalized enough to describe many different product types.

For our purposes Product Development (PD) means: the complete strategic, organizational, ideational, market and technical development process of creating a new product (New Product development – NPD), or improving an existing product, revitalizing a tired / expired product (Old Product Development - OPD) for the purpose of enhancing consumer benefits.  One can find this process explained in various resources ².

Note that the total cost details of a product will be more well-known for OPD projects than for NPD projects.  This article will use high-tech examples to clarify various discussions.

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²Quality Vs. Reliability From a Product development point-of-of-view)