Product development costs: what you need to know
Product development is an essential part of any business. It requires careful planning, research and analysis to ensure that a product meets the needs of its target market and can be sold at a competitive price. But how much does it cost to develop a new product? Understanding the different aspects and how they affect the overall cost is key to staying on budget. In this blog post, we’ll explore the various elements of product development costs, from industrial design and engineering services to prototyping and testing.
Industrial design costs
The cost of new product development varies greatly depending on the complexity of the project. A basic product might only require a few thousand euro for research and development, while more complex products can require hundreds of thousands or even millions in R&D. In this stage of development, it very much comes down to how many hours a team of engineers needs to work on solving technical challenges. Industrial design and engineering fees typically range from € 20.000,- to € 50.000,- for simple projects such as consumer electronics and upwards from € 100.000,- for complex projects such as medical devices, automotive or industrial equipment. A distinction must also be made in projects that are merely a re-design of an existing product or something that has new technical features. The latter is more complex and thus comes with higher product development costs.
Electronics and software
Products with customized electronics and software (e.g., applications) also require higher budgets to be developed. As these are labor-intensive tasks performed by expensive engineers, these costs tend to be higher than for industrial design. ManGo works on a continuous basis with talented electronics and application partners. To find out your electronic product development costs we can assist in creating a detailed briefing and make introductions.
Prototyping costs
Prototyping is an important part of product development because it allows testing designs before committing to full-scale production runs. Prototyping can include 3D printing or CNC machining parts for testing purposes or creating mockups or scale models for presentation purposes. Small 3D printed components can cost as little as a few euro’s each, complex prototype assemblies for devices, machines or automotive can run up to tens of thousands of euro’s or even much higher. Size, assembly time and required materials very much determine this. For your product development costs always take into account that most developments require multiple runs of prototypes to fine-tune a design.
Testing & certification
Before any product can be released to the public it must undergo rigorous testing to ensure that it meets all applicable standards and regulations. Depending on the type of product being developed this could involve laboratory testing (e.g., electrical safety tests), environmental testing (water resistance tests, heat chamber), usability testing (user experience surveys) or other types of tests as required by local laws or industry standards. These tests typically add tens of thousands of dollars in additional product development costs onto the project budget but are essential to ensuring that your products are safe, reliable, and compliant with all relevant standards. Especially for medical devices if clinical trials are required the costs rise significantly. Equally so in automotive for mandatory certification tests (e.g. crash, topple).
Product development costs overview
In most projects the following list applies for the product development costs encountered in chronological order:
- Industrial design & engineering
- Electronics and software development (if applicable)
- Prototypes (materials and building)
- Testing in-house or at labs
- Notified Body certification (if applicable
- Opening moulds / toolings for manufacturing (if applicable)
- Manufacturing (Minimum Order Quantities: MOQ’s)
There could even be more depending on the product you want to develop. Often the most expensive product development costs by far are opening moulds and MOQ’s for manufacturing. If you add up everything it’s easy to understand that even for relatively simple products a significant sum is required before you can enter the market. This investment however pales in comparison to the rewards that can be gained from a successful product.
Conclusion
Developing a new product is no small feat, as you have read there are many factors to consider when calculating product development costs. While these costs may seem daunting at first glance, they are absolutely necessary if you want your products to meet customer expectations and comply with all applicable regulations. Taking the time to properly plan out your project budget will help ensure that you don’t run into any unexpected surprises along the way! ManGo Product Design can consult you about required budgets, timelines and creating a step-by-step plan.
More information
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