Functional analysis is the first step. The basic functions or customer requirements of the product or service are listed, or brainstormed out. (Right brain thinking.) A function is best described by a verb and a noun, such as "make sound", "transfer pressure", "record personal details" or "greet customer". The question to be answered is "what functions does this product/service undertake?" Typically there will be a list of half a dozen or more functions. There is a temptation to take the basic function for granted. Do not do this; working through often gives very valuable insights. For instance, for a domestic heating time controller, some possible functions are "activate at required times", "encourage economy", and "supply heat when needed". The example shows a hamburger design.

Pairwise comparison or points distribution may be used to weight the functions or requirements. In pairwise comparison, each function is compared with each other function, and 1 point is given to the most important of the two, or zero points if the functions are considered equally important. Adding up the scores gives the relative weightings These relative weightings need to be converted to percentages such that the sum adds up to 100%. Now the components of the product are listed as columns in the matrix. See the figure. Then the importance of each component to each function is estimated and converted to a percentage of total cost. In the example, the function "taste good" is estimated to be influenced 50% by the beef and 25% each by bun and ketchup. The influence is written in the bottom left hand corner of each cell. The weighted influence (i.e. the weight x the influence) is written in the top right of each cell. The overall influence of each component is the sum of the top right hand cell entries, and is written in a row below the matrix. Then the cost of each component is estimated, and written in a row. The last step is to calculate a value index, which is the influence % divided by the cost %. Ratios less than one are prime candidates for cost reduction. Ratios substantially greater than one indicate the possibility of enhancing the feature. Back to the right brain.