Why might a small reduction in system performance greatly reduce total cost?

In systems engineering, the relationship between performance and cost is often analyzed through trade-off studies.

A small reduction in system performance can lead to significant cost savings because of the way subsystems interact. When components are highly integrated, achieving the final level of performance can be accomplished through various configurations. Optimization studies often reveal that the most expensive or complex requirements are not strictly necessary to meet the system's primary goals. By slightly lowering a performance target, engineers can avoid the disproportionately high costs associated with pushing equipment to its absolute physical or technical limits.1

Conversely, these studies help determine if a goal is reasonable. They may show that a system is being over-engineered, where the cost of achieving marginal performance gains far outweighs the practical value of those gains. By identifying these points of diminishing returns, systems engineers can achieve a more economical design without compromising the overall effectiveness of the system.1