Too many companies treat pricing like a math problem to solve after the product is built. But for Rene T. Domingo, that’s a costly mistake.
“To avoid the ‘back to the drawing board’ cycle, the target quality and target cost must be achieved at the same time during the design phase,” says Domingo, an adjunct professor at the Asian Institute of Management and a leading operations consultant. “Not after production and sales.”
In an exclusive interview with Financial Adviser PH, Domingo explains why quality and affordability must be engineered in—not added later—and how businesses can avoid the trap of building products no one can afford to buy.
Why Cost Can’t Be an Afterthought
Many companies fall into the habit of perfecting a product first, then trying to make it cost-effective later. But Domingo warns this approach leads to mispricing, wasted effort, and margin erosion.
“Product A priced at $8000 can last eight years, while product B priced at $4000 can last three years. While A seems to offer better VfM than B, neither will be purchased if the client’s budget is $5000 for something that lasts at least five years,” he explains.
If cost isn’t considered during design, companies risk creating a technically sound product that no one wants—or can afford.
Why Design is the Sweet Spot for Quality and Cost
The secret to hitting both quality and cost targets? Designing with purpose from day one.
“In the manufacturing industry, about 70–80% of cost is determined during the product design stage,” Domingo notes. This means the earlier companies focus on VfM (value for money), the more control they have over profitability, competitiveness, and customer satisfaction.
That’s why Domingo promotes the use of target costing, a method that starts by identifying what customers are willing to pay—and works backward.
“The traditional cost-plus approach can result in high prices that would lower VfM and make products unaffordable and uncompetitive,” he explains. “Target costing, also known as price-minus, ensures that products are desirable, salable, competitive, and profitable.”
How to Avoid the ‘Back to the Drawing Board’ Moment
To prevent late-stage redesigns and rushed cost-cutting, Domingo recommends a proactive mix of quality and process tools:
- Early Supplier Involvement (ESI) – Collaborate with suppliers early for cost-efficient solutions
- Design for Manufacturing (DFM) – Simplify parts and processes to cut waste and improve reliability
- Value Analysis / Value Engineering (VA/VE) – Remove unnecessary features without reducing value
- House of Quality (HOQ) – Align technical specs with what customers truly care about
These tools allow teams to design the right product at the right cost from the start, rather than backtracking when pricing becomes a barrier.
“An excellent contractor, if managing quality and costs well at the same time, should be reliable and cost-efficient from the start—and should be able to offer the lowest bid with the highest quality,” Domingo emphasizes.
Build Smart or Build Twice
The real innovation isn’t just about building better products—it’s about building better, affordable products that win customer trust and market share.
“If this version can be made to last six years at this same price point,” Domingo says of the hypothetical $5000 product, “it becomes a very competitive product with high VfM and superior CVP.”
The lesson is clear: quality that doesn’t fit the budget is quality that won’t reach the market. To compete and win, design with both performance and price in mind—from day one.
