Developing a new product is an exciting journey, but it’s also a complex process that involves a variety of costs. In this blog, we’ll break down the typical expenses associated with New Product Development (NPD) and how they’re typically allocated across the various stages of the design process. Although costs can vary significantly depending on the type of product and complexity of the project, our wide range of experience allows us to manage any unpredictability and keep your project on track. Our experience also allows us to complete work in a very effective way, ensuring your idea progresses smoothly from concept to production. All the stages which form part of your product design journey are quoted for individually and the payment for these stages is usually split into 50% upfront to kick off work and 50% upon completion of the stage. This allows our clients to progress their projects at a pace they’re comfortable with and ensures costs are more manageable too.
Understanding the Cost Breakdown
How much will developing your product idea cost? Well, we would need to review your unique idea to provide more accurate estimates, but a simple project that doesn’t contain any electronics can cost between £15-20k to get to an initial working prototype, and a project containing electronics will easily surpass the £50k mark to finalise the design, before production.
To help you further understand where these costs incur, as a guide, here’s a breakdown of how NPD costs are typically split throughout the design process:
Workshops
Workshops are often an important first step in the product design process. They provide an opportunity to gather all the necessary information about your project, ensuring everyone is on the same page. These sessions are not only invaluable for understanding the scope of your product idea but are also a cost-effective way to get our design team up to speed quickly and perhaps brainstorm some ideas or problems that you may not have considered already. If you have a solid understanding of how your product will work and how it will be designed, then a workshop may not always be necessary.
A half day workshop with our design team costs £1000+VAT and a full day workshop costs £1850+VAT.
Design Stages
During the Concept Design stage, we will explore a range of creative ideas to bring your idea to life. Our experience developing a wide range of products allows us to work through these stages efficiently, reducing time and cost while still maintaining high-quality design solutions. The deliverable of a Concept Design stage is typically a glossy presentation containing realistically rendered visuals of the concepts we’ve created, allowing you to get a first glimpse of how your product could look with materials and colours applied to it.
A Concept Design stage for a simple product could cost between £3750+VAT and £7500+VAT depending on project complexity. Projects are reviewed on an individual basis and stage costs are tailored to your requirements and project scope; the figures outlined in this blog posts simply provide a rough guide.
Prototyping and Electronics Stages
Prototyping is often one of the most expensive stages of the design process, especially for projects that involve electronics. However, for simpler products, such as small injection-moulded items, costs are usually more manageable. Prototypes are important for testing and refining your design, ensuring it performs as intended and to your requirements. For non-electronic projects the cost of these stages is mostly in the construction costs. This might include material costs, machine run time and our time preparing files as well as finishing and assembly of any prototypes. We have a workshop and several 3D printers at our studio, so we are often able to produce prototypes in house which speeds up the process and helps streamline costs too. On other occasions it is necessary for us to reach out to our network of trusted prototyping partners to have parts produced. Our ongoing and successful relationships with these partners mean we are still able to offer our clients affordable prices.
Electronics projects have the added stages and associated costs of electronics design and development, often in the form of PCBAs and then the production of these electronics which are then assembled into the prototype. Firmware development must also be completed to ensure the electronics have the required functionality programmed in, so this is another cost implication to be considered. The costs for any prototypes and electronics work will be presented to you in a Request for Quote (RFQ) stage before proceeding with prototype production.
Development Stages
Development stages can fall at almost any time during the process. After the Concept Design stage, we will typically start Concept Development, where we refine the chosen concept and engineer it so that it is suitable to prototyping. These stage almost always involve refining the design and addressing any issues identified during earlier stages such as prototyping. Development often requires multiple iterations, but the fixes and updates are typically minor and can be implemented quickly. These adjustments are critical to perfecting your product. The cost of a development stage will vary considerably depending on the number of changes or updates required. A Stage Specification will outline the updates we intend to make in any given stage, you can add your own requirements or make changes to this document before signing off on any development work.
Preparing for Manufacture
As your product nears production, we can assist with the creation of essential documentation such as manufacturing specifications. We can also complete any design for manufacturing updates to ensure your design can be produced as effectively as possible during production. This can often involves working with the chosen factory to make tweaks to the design to fit their machinery processes. These types of stages are generally quick but are also vital for ensuring a smooth transition to production.
The creation of a Manufacturing Specification could cost between £1500+VAT and £4500+VAT depending on the complexity of the product. A subsequent Production RFQ (Request for Quote) stage could cost a similar amount however if you require more factories and costs for your consideration, the RFQ stage will inevitably cost more. The result of this stage will be a presentation of production and tooling costs from various suppliers and factories along with unit costs at scaling volumes and shipping costs where applicable. These factories could be based anywhere internationally however lots of clients opt for factories in the far east as they can offer more competitive pricing.
Investing in Tooling and Setup Costs
Development stages can fall at almost any time during the process. After the Concept Design stage, we will typically start Concept Development, where we refine the chosen concept and engineer it so that it is suitable to prototyping. These stage almost always involve refining the design and addressing any issues identified during earlier stages such as prototyping. Development often requires multiple iterations, but the fixes and updates are typically minor and can be implemented quickly. These adjustments are critical to perfecting your product. The cost of a development stage will vary considerably depending on the number of changes or updates required. A Stage Specification will outline the updates we intend to make in any given stage, you can add your own requirements or make changes to this document before signing off on any development work.
Production Costs
Other than tooling and setup costs, it’s important to consider the cost of producing each unit of your product. Estimating these costs can often be informed at an early stage by reaching similar products in the market or products that share the same components. Factors like size, weight, and order volume will also influence shipping and warehousing expenses.
Branding and Marketing Materials
A strong brand identity and marketing strategy will be important for your product’s success on the market. We can help you develop assets for a range of uses such as packaging, websites, or social media. These materials can also be used to support crowdfunding campaigns or secure funding through other investment means. Our team is also experienced in creating logos and branding that will help you connect with your audience.
A Logo Concept Design could typically start at £3250+VAT (depending on number of logo concepts created) and the development of a brand guidelines document could start at £1500+VAT. Following the Logo Concept Design Stage, subsequent development stages will likely be required to further refine your logo. We can also assist with the creation of other assets such as packaging materials or instruction leaflets.
Setting Up a Website
If you plan to sell your product online, you might consider creating a professional website. The marketing assets created earlier can be repurposed to establish your online business and help to start making sales. Idea Reality can help to create a visual prototype for your website before handing this off to a web development company for the full site development. It is important to recognise that web development would be an additional cost outside of Idea Reality’s remit.
Selling Your Product
Selling your product will likely involve additional expenses, such as hosting fees, packaging materials, and staff costs. It’s important to factor these into your product pricing to ensure you have sufficient margins. Whether selling online or in person, having a clear understanding of these costs will help you build a profitable and successful business.
Conclusion
Developing a new product is an investment but understanding the how the costs are distributed throughout the design process can help you budget effectively and avoid any surprises or uncertainty. At Idea Reality, we’re on hand to guide you through every stage of the process, using our experience to deliver market ready designs and solutions whilst also managing costs effectively. Are you ready to bring your idea to life? Get in touch today.
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By James Lamb
Founder
