In an organization, design can be seen as a cost, an expense, or an investment. How design is perceived directly impacts its influence, priority in resource allocation, and participation in strategy.
Being considered an investment—one that generates competitive advantages and contributes to a company’s value—is not the same as being viewed as a support function that, due to its indirect contribution, may be deemed dispensable, subject to cuts, or replaced by external providers.
It is crucial for designers to understand how their role is perceived within the organization, as this allows them to communicate their value more effectively and develop strategies to demonstrate their impact.
Difference between Costs and Expenses
Let’s start with the difference between costs and expenses.
Cost
A cost is a direct investment in the production of goods or services and is related to value creation. Some costs can be capitalized if they are directly linked to the creation or improvement of an asset that generates future revenue or increases the company’s value. Costs that can be capitalized are generally referred to as CapEx (capital expenses). Examples include:
- Developing new key features that enhance the product and its market value.
- A (significant) redesign of an interface that improves conversion and user retention.
- Optimizing user flows that directly impact revenue generation (e.g., improving the checkout process of an online store).
- Creating a design system that streamlines future developments and maintains product consistency.
Expense
Expenses are necessary expenditures for the general functioning of the company but are not directly related to the production of the digital product. They can be classified as operating expenses and administrative expenses.
Operating expenses (OpEx) allow the company to function daily but do not generate a capitalizable asset. Examples include:
- Hosting and servers to keep the service available.
- Licenses for third-party software (Slack, Jira, Figma, etc.).
- Costs of technical support and customer service to resolve user issues.
- Team training and development programs (courses, certifications, conferences).
Administrative expenses are necessary for business operations but are not linked to product development. Examples include:
- Salaries of administrative staff (HR, Finance, Legal, General Management).
- Office rent or coworking spaces for the management team.
- Company insurance and employee benefits (healthcare, pensions, wellness programs).
Design as a Cost or as an Expense?
Design as a Cost:
The design team may be considered a cost if its work directly impacts the creation, improvement, or maintenance of the product or service the company sells. If design is a cost, it can be seen as a strategic asset that increases the company’s value.
Design as an Expense:
If design serves as support for business operations (e.g., branding, marketing) or for projects not directly related to the company’s core product (e.g., internal tools, operational improvements), it may be considered an operating expense. If design is an expense, it is viewed as a function that helps optimize costs and processes.
Which is better? A cost or an expense?
Different companies classify design differently based on their business model and internal accounting, within certain parameters. Some key factors include:
- Business Model: In software, digital product (SaaS, e-commerce), or manufacturing companies, design may be classified as a cost because it is directly tied to product creation. In service or consulting companies, it is often considered an expense.
- Internal Accounting: Some companies capitalize certain costs within the Product team if they are directly related to product development or improvement.
- The Role of the Product Team: A team that defines key new features is considered a cost, whereas a team focused on internal process improvements is an expense.
The advantage of capitalizing a cost is that it adds value to the company and, therefore, its market valuation. The advantage of classifying an expenditure as an expense is that it reduces taxable income within the same fiscal year, helping lower taxes.
How to Position and “Sell” Design
When Design Is Considered a Cost
If designers are considered a cost, meaning they work directly on the product or service being sold, they must emphasize their role as a strategic investment that increases both product and company value. Designers should position themselves as:
✅ Value creators who differentiate the product.
✅ A necessary investment to improve conversion, usability, and user satisfaction.
✅ A function that helps generate revenue and retain customers.
How to Measure and Communicate the Impact of Design:
📌 “The product page redesign increased the conversion rate by 20%.” → Design directly impacts revenue.
📌 “Simplifying onboarding increased user retention by 15%.” → Design improves retention and reduces churn.
📌 “UX writing improvements made the purchase process more intuitive, reducing support tickets and, therefore, operational costs.” → Design reduces support and development costs.
When Design Is Considered an Expense
If designers are considered an expense, meaning they perform support functions (such as branding, marketing, or internal communication) or work on projects that improve operational efficiency, their value lies in optimization and efficiency, helping reduce costs and improve business operations. In this case, designers should position themselves as:
✅ Business optimizers, helping create efficiencies, improve time-to-market, and enhance brand perception.
✅ Strategic support for the organization.
✅ Efficiency generators, helping reduce or avoid expenses (production, marketing, support costs).
How to Measure and Communicate the Impact of Design:
📌 “Improvements in the design and communication of the last advertising campaign increased the CTR by 30%.” → Design boosted marketing conversion.
📌 “A cohesive visual identity increased brand top-of-mind awareness by 40%.” → Design improves brand recognition, perception, and user trust.
📌 “Redesigning the supplier onboarding forms reduced the need for assistance in internal processes by 50%.” → Design reduced operational and support costs.
Summary
Designers must communicate their impact using metrics and results. The right approach depends on how design is classified in the organization.
- If design is a cost position it as a strategic investment that increases the value of both the product and the company. Communicate in terms of conversion, revenue, retention, and operational cost reduction.
- If design is an expense focus on efficiency, resource optimization, and business impact to justify its value.
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In an organization, design can be seen as a cost, an expense, or an investment. How design is perceived directly impacts its influence, priority in resource allocation, and participation in strategy.
Being considered an investment—one that generates competitive advantages and contributes to a company’s value—is not the same as being viewed as a support function that, due to its indirect contribution, may be deemed dispensable, subject to cuts, or replaced by external providers.
It is crucial for designers to understand how their role is perceived within the organization, as this allows them to communicate their value more effectively and develop strategies to demonstrate their impact.
Difference between Costs and Expenses
Let’s start with the difference between costs and expenses.
Cost
A cost is a direct investment in the production of goods or services and is related to value creation. Some costs can be capitalized if they are directly linked to the creation or improvement of an asset that generates future revenue or increases the company’s value. Costs that can be capitalized are generally referred to as CapEx (capital expenses). Examples include:
- Developing new key features that enhance the product and its market value.
- A (significant) redesign of an interface that improves conversion and user retention.
- Optimizing user flows that directly impact revenue generation (e.g., improving the checkout process of an online store).
- Creating a design system that streamlines future developments and maintains product consistency.
Expense
Expenses are necessary expenditures for the general functioning of the company but are not directly related to the production of the digital product. They can be classified as operating expenses and administrative expenses.
Operating expenses (OpEx) allow the company to function daily but do not generate a capitalizable asset. Examples include:
- Hosting and servers to keep the service available.
- Licenses for third-party software (Slack, Jira, Figma, etc.).
- Costs of technical support and customer service to resolve user issues.
- Team training and development programs (courses, certifications, conferences).
Administrative expenses are necessary for business operations but are not linked to product development. Examples include:
- Salaries of administrative staff (HR, Finance, Legal, General Management).
- Office rent or coworking spaces for the management team.
- Company insurance and employee benefits (healthcare, pensions, wellness programs).
Design as a Cost or as an Expense?
Design as a Cost:
The design team may be considered a cost if its work directly impacts the creation, improvement, or maintenance of the product or service the company sells. If design is a cost, it can be seen as a strategic asset that increases the company’s value.
Design as an Expense:
If design serves as support for business operations (e.g., branding, marketing) or for projects not directly related to the company’s core product (e.g., internal tools, operational improvements), it may be considered an operating expense. If design is an expense, it is viewed as a function that helps optimize costs and processes.
Which is better? A cost or an expense?
Different companies classify design differently based on their business model and internal accounting, within certain parameters. Some key factors include:
- Business Model: In software, digital product (SaaS, e-commerce), or manufacturing companies, design may be classified as a cost because it is directly tied to product creation. In service or consulting companies, it is often considered an expense.
- Internal Accounting: Some companies capitalize certain costs within the Product team if they are directly related to product development or improvement.
- The Role of the Product Team: A team that defines key new features is considered a cost, whereas a team focused on internal process improvements is an expense.
The advantage of capitalizing a cost is that it adds value to the company and, therefore, its market valuation. The advantage of classifying an expenditure as an expense is that it reduces taxable income within the same fiscal year, helping lower taxes.
How to Position and “Sell” Design
When Design Is Considered a Cost
If designers are considered a cost, meaning they work directly on the product or service being sold, they must emphasize their role as a strategic investment that increases both product and company value. Designers should position themselves as:
✅ Value creators who differentiate the product.
✅ A necessary investment to improve conversion, usability, and user satisfaction.
✅ A function that helps generate revenue and retain customers.
How to Measure and Communicate the Impact of Design:
📌 “The product page redesign increased the conversion rate by 20%.” → Design directly impacts revenue.
📌 “Simplifying onboarding increased user retention by 15%.” → Design improves retention and reduces churn.
📌 “UX writing improvements made the purchase process more intuitive, reducing support tickets and, therefore, operational costs.” → Design reduces support and development costs.
When Design Is Considered an Expense
If designers are considered an expense, meaning they perform support functions (such as branding, marketing, or internal communication) or work on projects that improve operational efficiency, their value lies in optimization and efficiency, helping reduce costs and improve business operations. In this case, designers should position themselves as:
✅ Business optimizers, helping create efficiencies, improve time-to-market, and enhance brand perception.
✅ Strategic support for the organization.
✅ Efficiency generators, helping reduce or avoid expenses (production, marketing, support costs).
How to Measure and Communicate the Impact of Design:
📌 “Improvements in the design and communication of the last advertising campaign increased the CTR by 30%.” → Design boosted marketing conversion.
📌 “A cohesive visual identity increased brand top-of-mind awareness by 40%.” → Design improves brand recognition, perception, and user trust.
📌 “Redesigning the supplier onboarding forms reduced the need for assistance in internal processes by 50%.” → Design reduced operational and support costs.
Summary
Designers must communicate their impact using metrics and results. The right approach depends on how design is classified in the organization.
- If design is a cost position it as a strategic investment that increases the value of both the product and the company. Communicate in terms of conversion, revenue, retention, and operational cost reduction.
- If design is an expense focus on efficiency, resource optimization, and business impact to justify its value.
