The value of a product can be interpreted in different ways by different people. Cost is important for some people, appearance is important for some, maintenance is important for some, reliability is important for some and so on. However, its the common characteristic is a high performance, capability, reliability, aesthetics, style etc., relative to its cost. Keeping all these parameters in mind, value can be defined as the ratio of Function and Cost.

Value = (Performance + Capability)/Cost = Function/Cost

Value doesn't directly mean the minimum cost. In some cases the value of a product can be increased by increasing its function without any change in its cost. Also, the value can be increased by improving the performance to a great extent with marginal increase in cost. And of course, the value can be increased by lowering the cost without any change in function. The best value engineering project results in improved function at decreased cost.

Sometimes, the concept of functional worth is important. Functional worth is the lowest cost to perform a given function.