What is the Cost of Product Development?
When you have a brilliant idea for a new product, it’s easy to get swept up in the excitement. However, before you dive right into developing your product, it’s important to take a step back and think about how much it will actually cost to bring your concept to life. The cost of product development can get out of control very quickly if you’re not careful. Even seemingly minor changes to the design, materials, or prototyping methodology can snowball into a massive bill.
This guide to product development costs will help you make more informed design choices that won’t eat away at your bottom line. By keeping product development overhead costs as low as possible without compromising the quality of your overall design, you’ll end up with a product you can be proud of—and one that could potentially turn a healthy profit.
The Average Cost of Product Development
It’s impossible to say with any certainty exactly how much your product development process will cost without taking into account all of the factors that are unique to your product and company. The estimated cost of product development varies significantly, depending on factors like:
- The complexity of your product design
- The resources you already have access to (and the ones you lack)
- Which raw materials you use
- Which design, prototyping, or manufacturing method you use
- Your timeline
- How many products or components you ultimately want to manufacture
- Whether you work with a professional product developer or choose to develop it yourself
But if you’re looking for a general figure to get started, the total cost of developing most modest products is $30,000, on average. This figure applies to relatively simple products and includes the cost of designing, prototyping, testing, and launching the new product. However, the more complex your product is, the higher the cost of product development will be. It’s not unusual for products to cost hundreds of thousands of dollars to develop.
This is why it’s important to calculate individual costs carefully or get a more precise estimate from the product developers you hire. Trustworthy product developers will be more than happy to walk you through the costs associated with every step of the process and will even offer suggestions on how to cut costs whenever possible. Knowing what to expect also gives you the chance to prepare for this process financially so you’re not surprised by any unexpected expenses.
How to Keep Development Costs Low
Whether you’re a large-scale company serving customers on a global scale or you’re a small business just getting started in the local market, there’s immense value in keeping the cost of product development as low as possible. Why waste money when you don’t have to?
The primary way to keep development costs low is by embracing lean product development practices. Lean product development is an offshoot of lean manufacturing. The goal of a lean system is to:
- Reduce waste
- Come up with innovative designs that customers really value
- Improve product quality
- Speed up the development cycle
All of these goals lead to cost savings over time. When you reduce waste, you’ll spend less on raw materials and excess labor. Identifying what your customers really want or need also prevents you from wasting time, money, and resources on dead-end products that won’t sell. Improvements in product quality also increase sales, so even if you spend more on quality materials up-front, you’ll make a higher return on investment. And finally, a faster development cycle gets your product to market as soon as possible so you can start offsetting the cost of product development right away.
In addition to these overarching goals, lean product development also focuses on concepts like:
- Maintaining a strong knowledge base: Keeping a detailed model of all of your previous ideas and designs allows you to quickly return to them if you run into problems with the current design.
- Training: Ensuring every member of the team understands and uses lean product development concepts will keep the system working smoothly and reduce costs that come from human error or miscommunication.
- Concurrent engineering: Some steps of the development process can overlap, which saves time. For example, you can perform some basic market research before you start designing the product and then perform more detailed market research during the design process. As more data is brought to light, you can tweak your design. You can also make multiple components for prototypes simultaneously using tools like CNC machines.
- Engineering expertise: Rather than allowing marketing experts to dictate the design, a team of skilled engineers is given more control over the development process. After the overall product concept is finalized based on marketing research, it’s up to the engineers to find the ideal solutions to reach those conceptual goals. This results in higher quality products and more streamlined designs.
- Rapid prototyping: This method enables you to make many prototypes in very little time so that you can identify problems quickly and refine your design in as little as a few weeks.
But how do you achieve these goals? Working with a lean product developer is the most cost-effective way to embrace this system.
How Do You Know Whether You’re Getting a Good Deal?
You could perform lean product development yourself in-house, but it’s easy to miss important details that will make your system more efficient. You may also lack some of the tools used for lean development, like CNC machines, CAD systems, advanced 3D printers, and precise cutting instruments. Even minor mistakes or inefficiencies could dramatically increase the total cost of product development.
Experienced developers not only have all of these tools, but they also understand all of the nuances of this system. Through firsthand experience, they know how to reduce waste and other costs without cutting corners on the design quality. Although you are paying the product developer to handle these details, you may actually save money due to increased product quality, faster development cycles, and reduced waste.
However, knowing which product developer to work with can be a challenge. The best product developers will assure you that you are getting a good deal on their services by providing you with a ballpark quote based on your exact product. The developer will meet with you to discuss all of the details of your idea and what you hope to achieve. Then, based on their years of experience in the field, they will offer you a detailed quote that includes a full breakdown of every anticipated expense. There should be no surprises.
The most trustworthy developers will also give you the freedom to change your design as you go along. So even if you agree on one prototyping methodology or material, you can change your mind as you develop your product. The professional development team will then give you a new quote based on that change.
Ultimately, the cost of product development must be weighed against the value of the product. When you work with professional developers and engineers, you’re more likely to create a high-quality product that will give you a high return on investment and that enriches people’s lives.
PRL’s engineers have dozens of manufacturing options available to help you solve any challenge facing your product: CNC machining, custom tooling, 3D printing, thermoplastic molding, reverse engineering, and more. No matter what stage your product is currently at, we can create it and optimize it for manufacturing.