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Investing in Product Engineering — Increase Revenue and Decrease Cost

Publisher IDC
Published Feb 06, 2025
Length 18 Pages
SKU # IDC19656976

Description

This IDC Perspective explores the correlation between the cost of R&D, cost of goods sold, and revenue growth for almost 1,000 discrete product manufacturers across five industries. A strong correlation has been identified where higher engineering costs results in lower production costs (higher gross profits) and higher revenue growth. While the precise nature of this cause-effect relationship is beyond the scope of this document, there is enough evidence to provide specific recommendations for technology customers, vendors, and consultants.“Investing in engineering and R&D isn’t just a cost, it’s a strategic lever for financial success and market competitiveness. As manufacturers face increased competition and production costs escalate, it is important for them to invest in engineering and R&D, with an eye toward driving both revenue and profits,” said John Snow, research director, Product Innovation Strategies at IDC.

Table of Contents

18 Pages

Executive Snapshot

Situation Overview

Product Success in a Volatile Economy

How Should the R&D Budget Be Invested?

Looking at the Data: Higher Engineering Budgets = Lower Production Cost

Looking at the Data: Higher Engineering Budgets = Higher Revenue Growth

The Power of Engineering to Reduce COGS — Tesla Example

Advice for the Technology Buyer

Technology Imperatives for the Engineering/R&D Budget

For Technology Vendors, Consultants, and Integrators

Learn More

Related Research

Methodology

Income Statement Data

Appendix: Comparing Five Industries’ Revenue, %CR&D, %COGS, and Growth Rates Across a Six-Year Span

Synopsis

Pricing

Currency Rates
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