IB Design Technology Topic 10.5 Economic Viability Revision Notes (HL)

IB Design Technology Topic 10.5 Economic Viability Revision Notes (HL) | RevisionDojo

Why Do Costs and Pricing Matter?

The balancing act between costs and pricing is essential to ensuring your product is both affordable for customers and profitable for your business.
In this section, we’ll dive into how costs and pricing strategies influence the economic success of products.

Balancing Cost-Effectiveness with Quality

Cost-effectiveness is about finding the balance between affordability and quality.
While it might be tempting to cut costs to make a product cheaper, sacrificing quality can damage your brand’s reputation and reduce customer satisfaction.
A truly cost-effective design uses resources efficiently without compromising the product’s value.

Note

Key Considerations for Cost-Effectiveness

Material Selection: Choose materials that provide durability and functionality at a reasonable cost.
Manufacturing Processes: Optimize production methods to minimize waste and reduce labor costs.
Volume of Production: Producing in bulk can lower the cost per unit due to economies of scale.

Tip

When evaluating cost-effectiveness, consider long-term factors like durability and customer satisfaction instead of focusing solely on upfront costs.

Delivering Value for Money

Consumers are more likely to buy a product if they perceive it as offering good value for money.
But what does "value for money" mean?
It’s the balance between the product’s utility and its price.

Example

A $50 water bottle might seem expensive—unless it:
Offers excellent durability
Keeps drinks cold for 24 hours
Is made from sustainable materials

How to Design for Value

Focus on Functionality: Ensure the product performs its intended purpose effectively.
Enhance Features: Add features that resonate with customer priorities, such as sustainability or convenience.
Communicate Benefits: Use marketing and branding to highlight how the product justifies its price.

Types of Costs in Pricing

Understanding the different types of costs involved in production is crucial for setting an appropriate price.
These costs can be categorized into fixed costs and variable costs.

Fixed Costs

Fixed costs remain constant regardless of production volume. Examples include:

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Definition

Paywall

(on a website) an arrangement whereby access is restricted to users who have paid to subscribe to the site.

anim nostrud sit dolore minim proident quis fugiat velit et eiusmod nulla quis nulla mollit dolor sunt culpa aliqua

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat.

Duis aute irure dolor in reprehenderit

Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum.

Note

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam quis nostrud exercitation.

Excepteur sint occaecat cupidatat non proident

Nemo enim ipsam voluptatem quia voluptas sit aspernatur aut odit aut fugit, sed quia consequuntur magni dolores eos qui ratione voluptatem sequi nesciunt. Neque porro quisquam est, qui dolorem ipsum quia dolor sit amet, consectetur, adipisci velit.

Tip

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat.

Lorem ipsum dolor sit amet, consectetur adipiscing elit.
Sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.
Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris.
Duis aute irure dolor in reprehenderit in voluptate velit esse cillum.

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Why Do Costs and Pricing Matter?

The balancing act between costs and pricing is essential to ensuring your product is both affordable for customers and profitable for your business.
In this section, we’ll dive into how costs and pricing strategies influence the economic success of products.

Balancing Cost-Effectiveness with Quality

Cost-effectiveness is about finding the balance between affordability and quality.
While it might be tempting to cut costs to make a product cheaper, sacrificing quality can damage your brand’s reputation and reduce customer satisfaction.
A truly cost-effective design uses resources efficiently without compromising the product’s value.

Note

Key Considerations for Cost-Effectiveness

Material Selection: Choose materials that provide durability and functionality at a reasonable cost.
Manufacturing Processes: Optimize production methods to minimize waste and reduce labor costs.
Volume of Production: Producing in bulk can lower the cost per unit due to economies of scale.

Tip

When evaluating cost-effectiveness, consider long-term factors like durability and customer satisfaction instead of focusing solely on upfront costs.

Delivering Value for Money

Consumers are more likely to buy a product if they perceive it as offering good value for money.
But what does "value for money" mean?
It’s the balance between the product’s utility and its price.

Example

A $50 water bottle might seem expensive—unless it:
Offers excellent durability
Keeps drinks cold for 24 hours
Is made from sustainable materials

How to Design for Value

Focus on Functionality: Ensure the product performs its intended purpose effectively.
Enhance Features: Add features that resonate with customer priorities, such as sustainability or convenience.
Communicate Benefits: Use marketing and branding to highlight how the product justifies its price.

Types of Costs in Pricing

Understanding the different types of costs involved in production is crucial for setting an appropriate price.
These costs can be categorized into fixed costs and variable costs.

Fixed Costs

Fixed costs remain constant regardless of production volume. Examples include:

Definition

Paywall

(on a website) an arrangement whereby access is restricted to users who have paid to subscribe to the site.

anim nostrud sit dolore minim proident quis fugiat velit et eiusmod nulla quis nulla mollit dolor sunt culpa aliqua

Duis aute irure dolor in reprehenderit

Note

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam quis nostrud exercitation.

Excepteur sint occaecat cupidatat non proident

Tip

Lorem ipsum dolor sit amet, consectetur adipiscing elit.
Sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.
Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris.
Duis aute irure dolor in reprehenderit in voluptate velit esse cillum.

1. Human factors and ergonomics3 subtopics

2. Resource management and sustainable production6 subtopics

3. Modelling5 subtopics

4. Final production11 subtopics

5. Innovation and design7 subtopics

6. Classic design2 subtopics

7. User-centered design (HL)5 subtopics

8. Sustainability in design (HL)4 subtopics

9. Innovation and markets (HL)5 subtopics

10. Commercial production (HL)5 subtopics

IB Design Technology 10.5 Economic Viability Notes

1. Human factors and ergonomics3 subtopics

2. Resource management and sustainable production6 subtopics

3. Modelling5 subtopics

4. Final production11 subtopics

5. Innovation and design7 subtopics

6. Classic design2 subtopics

7. User-centered design (HL)5 subtopics

8. Sustainability in design (HL)4 subtopics

9. Innovation and markets (HL)5 subtopics

10. Commercial production (HL)5 subtopics

Why Do Costs and Pricing Matter?

Balancing Cost-Effectiveness with Quality

Delivering Value for Money

How to Design for Value

Types of Costs in Pricing

Fixed Costs

anim nostrud sit dolore minim proident quis fugiat velit et eiusmod nulla quis nulla mollit dolor sunt culpa aliqua

Duis aute irure dolor in reprehenderit

Excepteur sint occaecat cupidatat non proident

Unlock the rest of this chapter with a free account

Why Do Costs and Pricing Matter?

Balancing Cost-Effectiveness with Quality

Delivering Value for Money

How to Design for Value

Types of Costs in Pricing

Fixed Costs

anim nostrud sit dolore minim proident quis fugiat velit et eiusmod nulla quis nulla mollit dolor sunt culpa aliqua

Duis aute irure dolor in reprehenderit

Excepteur sint occaecat cupidatat non proident

Unlock the rest of this chapter with a free account