Cost-benefit analysis (CBA) is a systematic approach to estimating the strengths and weaknesses of proposed solutions to problems. It is used to compare the expected costs and benefits of alternative options in order to decide which option is the most efficient and effective. In the context of product development, CBA can be used to compare the costs and benefits of different design options, manufacturing processes, or materials. It can also be used to assess the financial feasibility of a new product or market entry. While CBA is a powerful tool, it has some limitations. First, it relies on accurate data, which can be difficult to obtain. Second, it only considers financial costs and benefits, which may not capture all of the relevant impacts of a decision. Finally, CBA is based on assumptions about the future, which may not always be accurate. Nonetheless, CBA is a useful tool for making informed decisions about product development.
When you're starting a new product development project, it's important to understand the difference between a feasibility study and a cost-benefit analysis.