Total R&D cost as a percentage of revenue (three reporting periods prior)

This measure calculates the total research and development (R&D) cost in relation to revenue over the past three reporting periods. R&D costs include all labor, materials, and overhead associated with discovering new knowledge and translating research findings into plans or designs for new products. This measure is part of a set of Cost Effectiveness measures that help companies understand all cost expenditures related to the process "develop and manage products and services."

Benchmark Data

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Measure Category:
Cost Effectiveness
Measure ID:
104142
Total Sample Size:
430 All Companies
Performers:
25th Median 75th
- - -
Key Performance Indicator:
No
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Compute this Measure

Units for this measure are percent.

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(Research and development (R&D) costs (three reporting periods prior) / Total revenue (three reporting periods prior)) * 100.0

Key Terms

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Total annual revenue is net proceeds generated from the sale of products or services. This should reflect the selling price less any allowances such as quantity, discounts, rebates and returns. If your business entity is a support unit and therefore does not directly generate revenue, then provide the revenue amount for the units you support. For government/non-profit organizations, please use your non-pass-through budget. For insurance companies the total annual revenue is the total amount of direct written premiums, excluding net investment income. Note: Business entity revenue needs to only include inter-company business segment revenue when the transactions between those business segments are intended to reflect an arm's length transfer price and would therefore meet the regulatory requirements for external revenue reporting.

Cost effectiveness measures are those in which two related variables, one of which is the cost and one of which is the related outcome related to the expenditure are used to determine a particular metric value.

Measure Scope

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Cross Industry (7.4)

  • 2.1 - Govern and manage product/service development program (19696)
    • 2.1.1 - Manage product and service portfolio (10061)
      • 2.1.1.1 - Evaluate performance of existing products/services against market opportunities (10063)
      • 2.1.1.2 - Confirm alignment of product/service concepts with business strategy (10066)
      • 2.1.1.3 - Prioritize and select new product/service concepts (10074)
      • 2.1.1.4 - Plan and develop cost and quality targets (10073)
      • 2.1.1.5 - Specify development timing targets (10075)
      • 2.1.1.6 - Plan for product/service offering modifications (10076)
    • 2.1.2 - Manage product and service life cycle (10067)
      • 2.1.2.1 - Develop plan for new product/service development and introduction/launch (16824)
      • 2.1.2.2 - Introduce new products/services (10077)
      • 2.1.2.3 - Retire outdated products/services (10078)
      • 2.1.2.4 - Identify and refine performance indicators (10079)
      • 2.1.2.5 - Conduct post launch review (11423)
        • 2.1.2.5.1 - Carry out post launch analytics to test the acceptability in the market (19646)
        • 2.1.2.5.2 - Review market performance (11424)
        • 2.1.2.5.3 - Review effectiveness of supply chain and distribution network (11425)
        • 2.1.2.5.4 - Apply data and analytics to review supply chain methodologies (19647)
        • 2.1.2.5.5 - Review quality and performance of the product/service (11426)
        • 2.1.2.5.6 - Conduct financial review (11427)
        • 2.1.2.5.7 - Conduct new product development process assessment (11428)
    • 2.1.3 - Manage patents, copyrights, and regulatory requirements (19985)
      • 2.1.3.1 - Conduct mandatory and elective reviews (19941)
      • 2.1.3.2 - Review infringement of patents and copyrights (16826)
      • 2.1.3.3 - Determine patent and copyright needs (16827)
      • 2.1.3.4 - Define product technical documentation management requirements (19697)
      • 2.1.3.5 - Manage regulatory requirements (12771)
        • 2.1.3.5.1 - Train employees on appropriate regulatory requirements (12772)
        • 2.1.3.5.2 - Maintain records for regulatory agencies (12773)
        • 2.1.3.5.3 - Manage regulatory submission life cycle (12776)
    • 2.1.4 - Manage product and service master data (11740)
      • 2.1.4.1 - Manage materials master lists (11741)
      • 2.1.4.2 - Manage bills of material (11742)
      • 2.1.4.3 - Manage routings (11743)
      • 2.1.4.4 - Manage specifications (11744)
      • 2.1.4.5 - Manage drawings (11745)
      • 2.1.4.6 - Manage product/material classification (11746)
      • 2.1.4.7 - Develop and maintain quality/inspection documents (11747)
      • 2.1.4.8 - Maintain process specification data (11748)
      • 2.1.4.9 - Manage traceability data (11749)
      • 2.1.4.10 - Review and approve data access requests (11750)
  • 2.2 - Generate and define new product/service ideas (19698)
    • 2.2.1 - Perform discovery research (10065)
      • 2.2.1.1 - Identify new technologies (10070)
      • 2.2.1.2 - Develop new technologies (10071)
      • 2.2.1.3 - Assess feasibility of integrating new leading technologies into product/service concepts (10072)
    • 2.2.2 - Generate new product/service concepts (19669)
      • 2.2.2.1 - Gather new product/service ideas and requirements (19986)
      • 2.2.2.2 - Analyze new product/service ideas and requirements (19987)
      • 2.2.2.3 - Evaluate new product/service inputs and requirements (19988)
      • 2.2.2.4 - Formulate new product/service concepts (19989)
      • 2.2.2.5 - Identify potential improvements to existing products and services (10068)
    • 2.2.3 - Define product/service development requirements (19990)
      • 2.2.3.1 - Define product/service requirements (11331)
        • 2.2.3.1.1 - Define basic functional requirements (19991)
        • 2.2.3.1.2 - Derive interoperability requirements for products and services (16808)
        • 2.2.3.1.3 - Derive safety requirements for products and services (16809)
        • 2.2.3.1.4 - Derive security requirements for products and services (16810)
        • 2.2.3.1.5 - Derive regulatory compliance requirements (16811)
        • 2.2.3.1.6 - Derive requirements from industry standards (16812)
        • 2.2.3.1.7 - Develop user experience requirements (19992)
        • 2.2.3.1.8 - Derive ‘services-as-a-product’ offering (16814)
      • 2.2.3.2 - Define post launch support model (16815)
      • 2.2.3.3 - Identify product/service bundling opportunities (17389)
  • 2.3 - Develop products and services (10062)
    • 2.3.1 - Design and prototype products and services (19993)
      • 2.3.1.1 - Assign resources to product/service project (10083)
        • 2.3.1.1.1 - Identify requirements for product/service design/development partners (19994)
      • 2.3.1.2 - Prepare high-level business case and technical assessment (10084)
      • 2.3.1.3 - Develop product/service design specifications (10085)
      • 2.3.1.4 - Develop user experience design specifications (16813)
      • 2.3.1.5 - Provide warranty-related recommendations (16817)
      • 2.3.1.6 - Document design specifications (10086)
      • 2.3.1.7 - Conduct mandatory and elective external reviews (10087)
      • 2.3.1.8 - Design products/services (19995)
        • 2.3.1.8.1 - Design for manufacturing (16819)
        • 2.3.1.8.2 - Design for product servicing (16820)
        • 2.3.1.8.3 - Design for re-manufacturing (16821)
        • 2.3.1.8.4 - Review product troubleshooting methodology (16822)
        • 2.3.1.8.5 - Design and manage product data, design, and bill of materials (16818)
        • 2.3.1.8.6 - Design for product upgrades (16823)
      • 2.3.1.9 - Build prototypes/proof of concepts (10088)
      • 2.3.1.10 - Develop and test prototype production and/or service delivery process (10098)
      • 2.3.1.11 - Eliminate quality and reliability problems (10089)
      • 2.3.1.12 - Conduct in-house product/service testing and evaluate feasibility (10090)
      • 2.3.1.13 - Identify design/development performance indicators (10091)
      • 2.3.1.14 - Collaborate on design with suppliers and external partners (10092)
    • 2.3.2 - Test market for new or revised products and services (19996)
      • 2.3.2.1 - Prepare detailed market study (10093)
      • 2.3.2.2 - Conduct customer tests and interviews (10094)
      • 2.3.2.3 - Finalize product/service characteristics and business cases (10095)
      • 2.3.2.4 - Finalize technical requirements (10096)
    • 2.3.3 - Prepare for production/service delivery (19997)
      • 2.3.3.1 - Design and obtain necessary capabilities/materials and equipment (10099)
      • 2.3.3.2 - Identify requirements for changes to manufacturing/delivery processes (10097)
      • 2.3.3.3 - Request engineering/process change (11418)
      • 2.3.3.4 - Install and validate production/service delivery process (10100)
        • 2.3.3.4.1 - Monitor initial production runs (11417)
      • 2.3.3.5 - Validate launch procedures (19998)