Be Aware Of These Costs Before Building Your Product Idea

Learn the main costs of developing your physical product idea from concept to manufacturing so you can prepare your strategy.

Jesus Marti
Jul 5, 2019 · 6 min read
Photo by Amanda Jones on Unsplash

hen it comes to developing physical products, the costs of actually creating physical prototypes and manufacturing the final product drives the costs up in the development.

Through my product development services, I get to see many people betting on their own great ideas for a physical product and committed to bringing their product to life. Which is a good attitude in general, unless it is pursued blindly.

Most have their own estimation about how much they can invest to make that happen. However, in most cases, their estimations are far from market reality.

Developing physical products is not only costly but it is challenging.

There are several activities that you need to consider to get a more accurate estimation of the total cost of developing a physical product. Most of these costs come from the number of hours that a specific professional takes to perform such activities multiplied by their hourly rate.

Let’s have a look at the main activities involved in the development of a physical product.

Concept Design

Typically, an Industrial Designer will sketch several conceptual options for your product idea. The final concept chosen will be refined to include more details on how the product works, materials used and cosmetic considerations.

Mechanical Design

An engineer will create the technical 3D design of the product and its different components considering material properties, production processes and functional aspects of the product.

Electrical Design

The technical design for the electronic boards, batteries, sensors, wireless connectivity, power management and programming of the main functionality among others.

Technical specifications

These are the additional files and documentation defined based on the final designs developed previously. On one hand, the mechanical specs, typically 2D drawings with materials, dimensions and critical parameters of each component and specifications for production. On the other hand, electrical schematics and layout files to fabricate the boards and tests to be carried out.

Prototyping

Several rounds of prototypes, from mock-ups to functional versions and pre-production small scale series. Costs include materials and labor costs.

Product Testing

The number of tests that must be performed in your product to ensure that it is reliable and meets the specifications. Some might be informal tests for engineering confidence but some are required by industry standards and regulations.

Production tooling

This is the tooling and list of equipment necessary to manufacture the components and assembly of the final product. For instance, if you need molds to be made for plastic or metal parts, tooling quickly becomes the highest investment in all the development.

Initial production series

The first production build of a few hundreds or even thousands of units to validate the production stability and quality. Includes all the materials and purchased components required to produce the units plus the labor cost of assembly.

The costs of each activity will vary based on the type of product that you are building. Let’s have a look now at the estimated costs by product category.

Design Category

In the Design category, we consider products that have an aesthetic aspect and a combination of different parts and materials and in some cases a mechanical mechanism.

These products do not incorporate any electronics or smart features.

In this category, you can find products such as lifestyle accessories, furniture, kitchenware, toys and outdoors equipment among others.

Photo by Adnan Ghaffar on Unsplash

These are the typical activities and costs:

  • Concept Design (500$-1500$)
  • Mechanical Design (2500–5000$)
  • Technical specifications (500$-1000$)
  • Prototypes ~ 3–4 rounds (500$-1500$ per prototype round)
  • Testing (1000$-3000$)
  • Production tooling (5000$-20000$)
  • Initial production series (~500$)

That gives you an estimated range between 12.000$ to 35.000$ for the main development activities of a product in the Design category.

Soft-Goods Category

The Soft-Goods category consists of products that use soft materials such as fabrics, leathers and rubber-like materials.

Soft-Goods have their own particular design and development approach and are commonly faster to develop.

In this category, you can find products such as backpacks, carry bags, wallets and some sports goods among others. Although textiles are more and more integrated into tech products, I will only consider the pure soft-goods here without tech features.

Photo by SJ Baren on Unsplash

These are the typical activities and costs:

  • Concept Design (500$-1000$)
  • Technical Pattern & Drawings (500–2000$)
  • Technical specifications (500$-1000$)
  • Prototypes ~ 3 rounds (500$-1000$ per prototype round)
  • Testing (500$-1500$)
  • Production tooling (1000$-5000$)
  • Initial production series (~500$)

The estimated range in the Soft-Goods category is somewhere between 5.000$ to 15.000$ for the main development activities.

Technology Category

Technology products share most of the design activities but incorporate electronics and additional technology that require different professionals and approaches to integrate it all together.

Products in this category require longer development cycles due to demanding requirements and certifications.

In this category, you can find products such as consumer electronics, hardware, wearables, drones, and smart products among others.

Photo by Jonathan Lampel on Unsplash

These are the typical activities and costs:

  • Concept Design (500$-1500$)
  • Mechanical Design (2500–5000$)
  • Electrical Design (2500–5000$)
  • Technical specifications (1000$-2000$)
  • Prototypes ~ 4–5 rounds (1000$-2000$ per prototype round)
  • Testing & Certifications (2000$-5000$)
  • Production tooling (10000$-30000$)
  • Initial production series (~1000$)

Technology product development ranges from 25.000$ to 60.000$ for the main development activities. This can go even higher if you need custom software (such as for an app), or if you are developing complex technologies or highly regulated products (such as in the medical industry).

From the above, you can get an idea of the amount of investment needed to build a physical product. What I have shown above is merely the costs of the technical development and you probably need to add other business, marketing, and sales costs to that amount if you want to fully launch a physical product in the market.

Unfortunately, these development costs are the reason why many abandon their idea before they even start, or even worst, they start without really considering the potential costs involved and they realize too late.

My Suggestion

While those activities can’t be completely avoided and are necessary to develop your product, there are ways in which you could reduce the risks and use your budget effectively.

My suggestion is to look for methods that can let you bring your product to life faster and be able to validate it with users and stakeholders early and often.

With my clients, I use a framework that allows building product versions in short cycles so you can get feedback from the market before committing to full development.

By working with these focused builds you can get a functional version of your product while having control over your costs at each stage, ensuring that you minimize risks moving forward and generating interest in your product.

Most importantly, this approach can increase your chances of getting funding from private investors or with a crowdfunding campaign to support later stages and manufacturing of your product.

(Build Your Physical Product in Short Cycles with our Free Email Course)

Abilista guides innovators to develop their product ideas from concept, prototyping and all the way to manufacturing following our own step by step framework. We are already helping several entrepreneurs and startups to build their ideas by giving them access to simple and agile tools and expertise on-demand.

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Jesus Marti

Written by

Guiding aspiring inventors and entrepreneurs with great product ideas to develop and build their products with Abilista (www.abilista.com).

The Startup

Get smarter at building your thing. Follow to join The Startup’s +8 million monthly readers & +787K followers.

Jesus Marti

Written by

Guiding aspiring inventors and entrepreneurs with great product ideas to develop and build their products with Abilista (www.abilista.com).

The Startup

Get smarter at building your thing. Follow to join The Startup’s +8 million monthly readers & +787K followers.

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