Using "reduction" in a title

It may be less awkward to refer to it as the "halving method".

to reduce to one half, "halving the present cost"

"Does reduction by half sound weird ?"

No and yes (This sounds weird). No because it's typical of academic prose: probably verbose (but we can't know that without seeing the entire title). Yes because it's an unnecessary transmogrification (a beautifully weird word) of a verb into a noun.

How about saying something like "X reduces cost of producing Y by half" or "X reduces by half cost of producing Y"? You're probably introducing a new method or a new ingredient for a technical process. The first words of the title should indicate that, e.g., "Aluminum [the new ingredient] reduces weight of fishing sinkers by half" and "Eliminating unnecessary tests reduces medical costs by half".

I don't know if this is helpful because it's really necessary to see how you're planning to structure the entire title of the paper, not just three words of it. Can you give us an idea of what you're thinking of saying without revealing what you reasonably want to keep secret until the paper is published?

Reduction by half is alright but incomplete. The title should be something like Reduction of mosquitoes by half using insecticide.