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Posts Tagged "crowdfunding"

Four Common Startup Roadblocks to Success

January 23, 2018
3D Innovations
Crowdfunding, Manufacturing, Product Development, Startups
No Comments

hardware startupFailure is hard and certainly no one goes into building a startup thinking that they are going to fail—however, it happens. While failing is in no way enjoyable, that doesn’t mean that it does not have its benefits—in terms of learning what not to do. We can all learn from failure, we can even learn from other startup’s failures. Below are four areas where hardware startups have faltered. Making yourself aware of the challenges associated with each of these areas, you are more likely to make educated decisions that (hopefully) allow you to avoid failure altogether.

Wrong Design

Entrepreneurs are designers at heart—they want to design a product, methodology or experience for their target market. They have a brilliant idea and want to introduce it into the marketplace. Design failure can arise rather quickly if the startup founder is not willing to modify their original design idea to meet the needs of customers or manufacturing.

If your customers are asking for your product to function a certain way, feel a particular way or look a specific way, you are going to want to modify your design. At the end of the day, you want people to both purchase and enjoy your product.

When you are working towards commercialization of a product, the goal is to be efficient, minimize costs and get your product onto store shelves quickly—DFM (Design for Manufacturability) works to do just this. With DFM you work out any potential issues before manufacturing planning which saves both time and resources. If you fail to design your product with manufacturing in mind, you are making your startup extremely vulnerable to hefty manufacturing costs and even the potential that it is not able to be manufactured at all.

Reluctance to Get Prototype Feedback

Plenty of hardware startup founders refuse to let anyone see their product until it’s time to launch. Many are afraid that someone will steal their idea, that potential customers won’t like it until it’s perfect, or they want to get a big head start against the competition. Whatever the reason, failure to get feedback is often fatal for a startup.

Feedback is critical during product development. You aren’t going to know if you are on the right track without feedback from your target market. You are going to want people in your target market to test your product (not just family and friends). It is helpful to get feedback that is both honest and actionable. By creating an inexpensive prototype, and gathering feedback from it, you will be in a much better position as you build your product. This feedback loop is important until the final design is ready.

Product/Market Fit

It doesn’t help your startup if you have a beautiful product that works flawlessly if the market for it just isn’t there. For example, if you are positioning an electronic gadget for the 65+ year old crowd you are going to have a hard sell if they are not well versed in the latest technology trends, or if you are targeting the 18-25 year old crowd with a gadget that is overly cumbersome you are going to face an uphill battle. The solution to this is to find out what appeals to the target market you are aiming to capture and design/modify your product to grab and hold their attention.

Funding

This list would not be complete without the mention of funding. Funding is the primary stumbling block for a majority of startups. Developing, manufacturing and launching a product takes time and money. Whether you are turning to crowdfunding or looking for investors, you are bound to face a hurdle or two.

If your goal is to raise capital from investors, be prepared for rejection (a number of times) before you succeed. The process almost always takes longer than you think it will, so start early in your quest to find an investor.

If crowdfunding is your plan, be sure that you show up with a nearly flawless campaign. Your video, content and prototype need to be ready to go. Your goal is to show potential investors that you have a plan laid out, it is well researched and that you are ready.

Starting a hardware company comes with a unique set of challenges. If you can navigate these four common roadblocks, you will be in a much better position for a successful product launch.

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3D Innovations is a Product Development Company – from the 3D Design to a fully functional 3D Prototype & Product.

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Four Considerations Before Launching a Crowdfunding Campaign

November 16, 2017
3D Innovations
Crowdfunding, Intellectual Property, Startups
No Comments

Crowdfunding can help hardware startups launch not only a product, but an entire company. The power of “the crowd” is strong and can be a great asset for entrepreneurs. However, by now we have all heard of those crowdfunding campaigns that make headlines, for all the wrong reasons—Coolest Cooler and Pebble stand out, both raised a considerable of money, but stumbled when it came to production manufacturing and order shipment. In order to avoid issues early-on, there are a few considerations to take into account before you launch that crowdfunding campaign.

Evaluate Your IP Exposure

Is there a business out there with a similar product? If so, how is yours different? “Start by reviewing any patents marked on similar competitive products, product packaging or your competitors’ web sites. If your product is similar to a specific competitor’s, you can search patents by owner of record. You can also search on Google for any patent-infringement lawsuits related to the same or similar products/services. (Entrepreneur)”

Do your due diligence and research patents that are similar to your product. You can be liable for patent infringement whether you knew about the patent or not.

Consider trademark and copyright protection for your product and startup as well. It is better to have your logo, tag line, text and photographs protected, than to risk someone else using them without your permission.

Decide If A Patent Is Necessary

Securing and protecting the intellectual property (IP) rights to your invention is key to successful commercialization. As soon as you make your crowdfunding campaign public, you forfeit your right to obtain a utility patent on that product unless you have previously filed a patent application. Costs can be an issue when it comes to filing a utility patent, however a provisional patent application is cheaper and still protects your invention. A provisional patent application will allow you to keep your rights to a utility patent for 12 months while you decide the next move for your startup. You will also be able to use the coveted, “patent pending” term as you market your product.

A design patent is another option if the value of your product lays largely in its unique design. This design patent can block competitors from making an exact copy of your product, but it doesn’t block them from making a functionally equivalent product with a different appearance.

Build A Functional Prototype

A functional prototype is necessary when you are trying to get people excited about a new product. While people can indeed envision a product from a great description, there is no substitute for the actual thing. This prototype not only shows potential investors what your product can do, it is also necessary for the marketing material on your crowdfunding page.

Develop A Video

Let’s face it, you can’t have an exciting video unless you have a functional prototype. The video portion of your page is where you let your product shine. You want to demonstrate your product to potential customers and let them get a feel for what it has to offer. The more descriptive and creative your video is, the more people are going to get truly excited to contribute to your campaign and share your campaign with friends.

While there are many moving parts to a crowdfunding campaign, these four considerations should be thoroughly reviewed by your team to set yourself up for success right from the start.

 

Have questions related to product development? We are happy to help! Send us an e-mail at info@3d-innovations.com

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3D Innovations is a Product Development Company – from the 3D Design to a fully functional 3D Prototype & Product.

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Hardware Startups: Crowdfunding — The Power of ‘The Crowd’

December 14, 2016
3D Innovations
Crowdfunding
No Comments

As the popularity of crowdfunding has grown, hardware startup entrepreneurs in particular have found success tapping into ‘the crowd’ and moving their products from concept to shelves. A successful crowdfunding campaign begins with one key component: planning. Start planning and preparing for your campaign months in advance so that when it is time to go live, you have a well-polished campaign that highlights your brilliant product.

If you are ready to tap into the power of ‘the crowd’ below are four essential items that can’t be overlooked:

student_trainingA Working Prototype

A functional prototype is necessary when you are trying to get people excited about a new product. While people can indeed envision a product from a great description, there is no substitute for the actual thing. This prototype not only shows potential investors what your product can do, it is also necessary for the marketing material on your crowdfunding page.

An Exciting Video

Our second point correlates directly with the previous one, you can’t have an exciting video unless you have a functional prototype. The video portion of your page is where you let your product shine. The more descriptive and creative your video is, the more people are going to get truly excited to contribute to your campaign.

Early Customer Connections

Don’t wait for your crowdfunding page to go live before you start connecting with your customer base—this is too late. Connect early-on with potential customers to help build anticipation for your product and campaign. This is the time where you tap into your connections to form key partnerships. Do you know any industry influencers? If so, connect with them and work on forming a partnership in which they will be willing to help share your campaign with their connections. Remember, crowdfunding is all about tapping into ‘the crowd’, so the more people that see your campaign the better your chances are for success.

Content Creation

Let your creativity run wild! This includes all videos, photos and text; make your content unique and memorable. Also don’t forget to include the “ask” in your pitch. This piece is often overlooked so the message gets lost. A clear and concise “ask”, coupled with a creative campaign means that you are on your way to crowdfunding success.

Setting up your crowdfunding campaign will take planning and hard work, but remember that it is also supposed to be fun. Show potential backers the fun side of your product and your team.

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3D Innovations is a Product Development Company – from the 3D Design to a fully functional 3D Prototype & Product.

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Hardware Startups: Increase Chance for Success by Reducing Risk

November 29, 2016
3D Innovations
Startups
No Comments

Building a hardware startup is not for the faint of heart. In an ideal world, we would be able to eliminate all risk and guarantee ourselves success—since that isn’t possible, the next best thing is to find ways to reduce risk as you develop and bring your product to market. By reducing risk in a number of areas you are increasing your chances for success. Below are a few ideas on how to reduce risk for your hardware startup.

3D CAD drawingBuild Prototypes

Developing and building a prototype proves that you can construct and deliver a finished product with the capabilities you want in your product, while staying on budget. A prototype is a baseline for your team and lets you work out any issues early in the design process. During prototype development you will also be able to assess if there are alternate and more efficient ways of building your product—thus, saving both time and money.

Along with prototype development, you want to start the DFM (design for manufacturability) process immediately. This means that you are developing your product to best fit manufacturers’ capabilities and requirements. It can be a costly mistake to build a product with the mindset that a manufacturer will just be able to deliver what you provide them—this is almost never the case. To avoid the (costly) risk of having to redesign your product, start the DFM process congruently with prototype development.

Gather Design Feedback

While you will have an engineering partner working on the development of your hardware product, it is always a good idea to get another set of eyes to review the design. Large corporations have multiple engineers review products to verify the design and provide valuable feedback, before manufacturing begins. A hardware startup doesn’t have the budget of a large corporation, but it can emulate this valuable business practice to reduce risk.

Connect with the Audience

Start building your audience and defining your target market early in the product development cycle. Your target market will be able to provide you with design feedback from a customer point-of-view and also help build interest in your brand. If you wait to connect with your audience until after you launch, you have done your startup a disservice by not building excitement early on and gaining market traction. When you build a rapport with your target market before your product launch, you will have customers ready to buy your product as soon as it’s available.

Building a hardware startup can be challenging; however, with some foresight you can greatly minimize risk while increasing your chance for success.

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3D Innovations is a Product Development Company – from the 3D Design to a fully functional 3D Prototype & Product.

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Hardware Startups: Overcoming Failure to Find Success

November 17, 2016
3D Innovations
Startups
No Comments

“Failure should be our teacher, not our undertaker. Failure is delay, not defeat. It is a temporary detour, not a dead end. Failure is something we can avoid only by saying nothing, doing nothing, and being nothing.” – Denis Waitley

hardware startupsBuilding a hardware startup is hard work, and the road to success is often dotted with moments of failure, however these moments of adversity make you stronger as an entrepreneur. We tend to perceive failure as more public than success, and try our best to avoid it so as not to be embarrassed. The simple truth is—no great success was ever achieved without failure. So in order to succeed in the world of hardware startups, you must first understand that failure is just a stepping stone to greatness. Below are three common failures experienced by hardware startups, and ideas on how to overcome these obstacles.

Unachieved Funding Goal

The fact is that hardware startups are costly. Between product development and manufacturing, costs can add up quickly. While some entrepreneurs are able to bootstrap and fund the business themselves, more often than not, hardware entrepreneurs need to seek outside funding to help launch their product. If you are having trouble with funding, here are a few points to consider:

  • Setup a crowdfunding campaign. Not all crowdfunding sites are equal. There are lots of crowdfunding websites out there, and you need to do your research to find which one aligns best with your product and brand. (Here is a Forbes article that outlines the top 10 business crowdfunding websites.) When it comes time to setup your campaign, take the time to plan it out, build your “story” and develop a quality video to help market yourself to potential backers. The more creative and organized your crowdfunding campaign is, the more likely you are to raise funds.
  • Connect with Venture Capitalists. VCs can be intimidating. Many entrepreneurs are less willing to approach VCs because of certain preconceived notions—such as, they are too busy, will ask for too much business equity, or hard to do business with. While these might ring true for some VCs, it most certainly is not true for all Reach out to your business network and try connecting with VCs that have experience in your industry.
  • Talk with industry experts. Meet with and interview experts in the industry your hardware startup is trying to break-in to. These experts have vast experience and might be able to point you towards funding opportunities.
  • Reach out to family, friends and business associates. These people have a vested interest in you and want to see you succeed; therefore, they can make excellent investors. Be sure to approach family, friends and associates in a professional business manner and treat meetings with them like you would any other investor. You want them to know that you are serious about your startup and are ready to put in the time and effort to find success.
Target Market Lacks Interest

The main reason your target market will lack interest is because the product is not meeting their needs. You need to first define what the target market wants out of your product and then structure the foundation of your product around these desires. If you begin to build your audience while your product is still being developed, you will have people ready and eager to buy your product when it is available for sale.

  • Market Research. Early in the product design process, reach out to your target market to solicit feedback. These are the people that you want to buy your product, so you need to be sure that you are meeting their needs. Use surveys, questionnaires and focus groups throughout the product development process to gauge customer interest.
  • Build a Functional Prototype. Take your market research one step further and create a functional prototype, or multiple if it can easily be done, to let potential customers test out your product. Allowing them to test your product for a period of time will let them really get a feel for your invention and the feedback you receive will be more specific and in-depth.
High Manufacturing Costs

As a hardware startup, manufacturing is going to be your single biggest expense. Keeping costs low while your product is new to the market will help you reduce your risks and stay out of the red.

  • Ramp up manufacturing volume slowly. Start off manufacturing your product locally and in small batches. Generally, working with a local manufacturer will result in a higher quality product because you are able to closely monitor the manufacturing process. While sending your product overseas to be manufactured from the offset can be tempting, there are inherent risks and the worst case scenario is that you rush into manufacturing a large order and are then stuck with inventory that you simply can’t sell.
  • Negotiate, negotiate, negotiate. When you are researching manufacturing partners keep in mind that many things are negotiable. Yes, there will be unavoidable fixed costs, however there are also negotiable items and many manufacturers are willing to match or beat quotes from a competitor.
  • Have the Deposit Available. Money talks. At the end of the day, the manufacturer wants to get paid. If you have the deposit readily available, you find yourself in a strong negotiating position.

Failure is not permanent and it does not have to be the end. While no one enjoys failing, it is a chance to learn, grow and refocus your energy.

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3D Innovations is a Product Development Company – from the 3D Design to a fully functional 3D Prototype & Product.

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The Top 3 Challenges Between Launching & Scaling Your Hardware Startup

October 11, 2016
3D Innovations
Startups
No Comments

Each stage of launching a hardware startup comes with its own set of challenges. While the challenges are unique for each business and each industry, below are the top three universal challenges we have seen arise time and again.

As you read through the two lists, you will notice a theme developing between the stages. During the launch phase, the challenges tend to focus on the startup founder and business acumen. As the hardware startup scales though, the challenges tend to focus more on the manufacturing side of the business. This is why the importance of finding the right manufacturing partner for your startup from the get-go cannot be stressed enough.

Challenges when launching a hardware startup:
  1. Funding. Whether you plan to bootstrap or seek outside assistance, funding is typically the main hurdle. Unlike software development, hardware development requires a large amount of capital for prototyping, testing, packaging, and tooling/mold for production manufacturing. The initial round of funding will usually suffice through the development and prototyping stages, but will likely require additional funding once the product is ready for production and distribution.
  2. Lack of Knowledge. Most startups do not have the internal resources and knowledge to plan and thoroughly develop each product development stage. This lack of resources means that necessary design, prototyping, testing, certification, and manufacturing requirements can get overlooked. Main challenges with the manufacturing process include, vendor management and supply chain resources. Both of which are critical to developing a successful startup. In order to combat these challenges, connecting with outside product development firms/resources and experts will not only help accelerate product development but also ensure that these challenges will be manageable and not the downfall of your startup.
  3. Identifying Opportunities. Identifying market opportunities and developing go-to market strategies is another common pitfall. While hardware startup founders are intensely focused on product development, creating a sound business strategy can fall to the wayside. Connecting with distributors and existing sales channels early in the product development process should be happening while the product is still in development. Building these partnerships takes time and the earlier you start, the better.
Challenges when scaling a hardware startup:
  1. Manufacturing & Inventory Management. Scaling up manufacturing requires a larger influx of capital as compared to the launching stage. However, this is a good problem to have since it means that the market has received your product well and demand is abundant. It will also mean that some level of product inventory is required, so having additional space and location for the product is not only necessary, but a vital part of your logistics plan.
  2. Manufacturers Capabilities. Depending on your manufacturer’s capabilities, this can make or break scaling opportunities. Manufacturers may not have enough resources, machinery, and capabilities to meet your product’s demand.  If a manufacturer is not setup for high volume production, then the output required will not be able to keep up with the required amount needed to fulfill orders.  Several well-known and successfully funded Kickstarter campaigns have run into this problem, causing headaches for the company and frustrated customers waiting for their products to be packaged and shipped.
  3. Meeting Demand. Meeting the demand of the market will be dependent upon the manufacturing capabilities. You need a manufacturing partner that will be able to deliver enough of your product on-time and on-budget. If your manufacturing partner cannot keep up with customer demands, your startup, brand and product will suffer —and this could spell doom for your business.

By now we have all heard the saying, “hardware is hard” — however, with proper planning and experts by your side, launching your hardware startup doesn’t have to be impossible.

Have questions about launching or scaling your startup? Send them our way, info@3d-innovations.

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3D Innovations is a Product Development Company – from the 3D Design to a fully functional 3D Prototype & Product.

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Hardware Startups: Defining Your Niche Market

August 22, 2016
3D Innovations
Startup Connector, Startups
No Comments

Launching hardware startups, or any type of business for that matter, is a gamble—but defining and finding your niche market doesn’t have to be. Knowing your niche market is one way for hardware startups to quickly get their product into the hands of consumers and find success.

What is a niche market?

niche_market“A small but profitable segment of a market suitable for focused attention by a business. Market niches do not exist by themselves, but are created by identifying needs or wants that are not being addressed by competitors, and by offering products that satisfy them.” (Business Dictionary)

Developing a product that specifically targets a segment of the market that is not having their needs met is a great way to scale a business quickly. The competition is low and the barriers to entry are minimal, which is an ideal landscape for launching a hardware startup.

Defining a Niche Market

Defining your niche market means that you need to have a deep understanding of both your product and the consumers you are marketing your product towards. Below are a few ideas on how to define a niche market for your hardware startup.

  • Define The Gap. What is missing and how will your product address it? Identify “the gap”, or problem, in an existing larger market that you aim to solve.
  • Understand Your Ideal Customer. With whom do you want to do business? Be as specific as you can. Create a “wish list” and narrow your ideal customer down as much as possible. For example, a small niche would be: customers located in Northern California, which make $60,000+ a year and are avid outdoor biking enthusiasts. This focus will help you develop your product and find your target market.
  • Focus. Clarify the product that you want to develop and sell. Have a clear understanding of your product and how it meets the needs of your ideal consumer. For example, you don’t want to say that you are going to design a GoPro accessory; instead you can say that you want to sell a GoPro accessory that easily attaches to a baseball hat.
  • Identify Your Strengths. What sets your hardware startup apart? Three factors to consider, what makes your startup unique, identifiable and is it scalable? You should be able to apply these three characteristics to both your startup and your buyer personas. While your business might be starting out in a small niche, having a product that is scalable will translate into long-term growth and success.

Once you have a clear understanding of the niche market you are aiming your product towards, take time to test this market and be ready to re-evaluate if necessary. In the end, having a firm understanding of your niche market will mean that your startup is taking a calculated risk, and not just a gamble.

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3D Innovations is a Product Development Company – from the 3D Design to a fully functional 3D Prototype & Product.

Startup Connector is a Manufacturing Accelerator helping companies commercialize—turning ideas into products.

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The Upside & Downside of Crowdfunding for Hardware Startups

August 15, 2016
3D Innovations
Crowdfunding
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With the exponential growth of crowdfunding, hardware startups are finding it easier to raise funds and launch their product into the marketplace. For instance, on Kickstarter in 2015, the amount of money going to funded projects increased by 35%, or $160 Million more than in 2014. There were 54,831 projects funded on Kickstarter in 2015, which is an increase of over 10,000 from the previous year. In addition, the Design and Technology categories were among the fastest growing segments.* Crowdfunding continues to grow in popularity and has transformed into a viable funding option for hardware entrepreneurs. However, like any type of business funding, crowdfunding has its upside and downside, and before you setup your campaign there are a few things to consider.

Upside of Crowdfunding

Crowdfunding is often viewed as a way to raise funds and validate your product idea (both of which are true and terrific for startups). However, there is one aspect that many hardware entrepreneurs fail to consider, it is the community support of your early-adopters. The influence that these backers have on the success of your crowdfunding campaign should not be taken lightly.

hardware crowdfundingThe early-adopters help create, define and market your product to a much larger audience.  Through comments and feedback on your crowdfunding page, you will be able to get a firm grasp on your product-market fit; which in turn, will let you know if you are on the right path or if you need to pivot your current product and redesign your strategy. In this manner, crowdfunding is the culmination of the lean startup.

Through your early-adopters you also gain exposure that you would not have been able to receive if you went solely with the traditional Venture Capital (“VC”) funding route. The more exposure your campaign receives and the more public interest it garnishes, will undoubtedly affect your product’s funding. Recently, VCs have started paying close attention to successful campaigns as a way to evaluate a startup before investing their own funds. Hardware investors understand that crowdfunding campaigns give an advantage to startups because they speed up the market feedback process—which in turn, helps minimize a VCs potential investment risk.

Downside of Crowdfunding

Failed campaigns, wasted time and underestimated product development costs are crowdfunding downsides experienced by startups. When you are an early-stage startup there is nothing worse than failure and wasted time. To prepare for these potential missteps it is crucial that you plan ahead.

While a failed campaign can be attributed to a number of things, the most common factor is the lack of an engaging story. Early-adopters need to be motivated to invest in your product, and one way to do this is through an interesting campaign with a backstory that grabs their attention. Your “story delivery” also demonstrates to early-adopters that you have a strong marketing strategy that will translate well from your crowdfunding campaign and into the marketplace.

Another pitfall to avoid is asking for the wrong amount of funding. Estimating your total development costs can be tricky, but this risk can be minimized with the input from experienced team members and outside consultants. Manufacturing and packaging is one area that is particularly challenging for hardware entrepreneurs, and getting a firm “estimate” can be even harder. (Our advice, research potential manufacturers and meet with a variety of them before settling on one.) If your dollar estimate is off, it can sink even the best crowdfunding campaign.

Without and engaging story or correct project cost estimates you risk crowdfunding failure. The time you spend crowdfunding will be wasted, which can be detrimental for early-stage hardware startups.

*ICO Partners Kickstarter in 2015—Review in numbers

Have additional questions regarding crowdfunding for your hardware startup? Send them our way, info@3d-innovations.com

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3D Innovations is a Product Development Company – from the 3D Design to a fully functional 3D Prototype & Product.

Startup Connector is a Manufacturing Accelerator helping companies commercialize—turning ideas into products.

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Manufacturing Facts Hardware Entrepreneurs Need To Know

June 15, 2016
3D Innovations
Manufacturing
No Comments

Developing a product is exhilarating, however when the time comes to start the manufacturing phase of the product development process, many entrepreneurs aren’t exactly sure where to begin. Below are some pieces of advice that every hardware startup should know about the manufacturing process.

mfg3Understand your cash flow.

Many startups are strapped for cash—especially during the early days—that is why understanding your company’s cash flow is crucial. Depending on your hardware product, you may be required to purchase certain components six months to a year before your launch. Work with your manufacturer to setup a realistic payment option that won’t leave your startup in the red.

Find an experienced manufacturer.

All manufacturers have experience, but your goal is to find a manufacturer that has experience building a product similar to yours. Chances are that if they have experience building a similar product, the number of challenges that arise will diminish. Also, ask to see product samples so that you can get a feel on the quality of work they produce.

If your goal is to manufacturer your product in the U.S., prepare to pay a little bit more. However, some entrepreneurs don’t mind paying more for the comfort of being able to visit the manufacturing facility on a regular basis. During the early production runs you are going to want to be on-site to talk with the engineers to make sure things are running smoothly.

Be prepared to compromise.

You might have visions of making your product from recycled materials, or certain sustainable materials, however, these may not be the best options for your product. Your product is going to need to meet certain thresholds and tolerances, which means that using the correct material is imperative. Be prepared to compromise on things such as materials, the manufacturing timeline and other variables that will undoubtedly arise.

Start with small production runs.

While you are putting final touches on the design and working out the “kinks”, it is a good idea to start with small production runs. The minimum (around 5,000 units) run will give you a chance to fix any issues that come up without experiencing potentially dire financial consequences.

If you are planning on running a crowdfunding campaign, a small production run might not be feasible if you have a wildly successful campaign. In that case, you can consider the option of running multiple manufacturing lines. While this can complicate the manufacturing process, it will help you stick to the timeline you laid out for customers. If you would rather stick with the small product run method, let your customers know that you plan on starting with small batches and scaling up gradually, which will mean a longer wait time—keep in mind that most customers are willing to wait when the startup is transparent about their timeline from the get-go.

Do you have additional questions about the manufacturing phase of the product development cycle? Let us help! Contact us by e-mail at info@3d-innovations.comor or by phone at 1-808-772-8667.

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3D Innovations is a Product Development Company – from the 3D Design to a fully functional 3D Prototype & Product.

Startup Connector is a Manufacturing Accelerator helping companies commercialize—turning ideas into products.

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The True Cost of Bringing Your Hardware Product to Market

April 19, 2016
3D Innovations
Startup Connector, Startups
No Comments

costsUnderestimating the costs of bringing a product to market is a pitfall many entrepreneurs make. This one mistake can seriously derail a startup. Hardware products are notorious for being costly, so it is wise to estimate your costs before jumping in. Technology innovations, such as 3D printing, have helped lower some of the associated costs, but there are still others that many entrepreneurs aren’t aware of.

Below is a list of some of the major costs associated with launching a hardware product.

  • 3D Rendering & Prototyping. 3D rendering lets you design and accurately visualize the product before investing in an actual model. Once you have a final design, it is time to build a prototype. This is a critical step because it is here in which you test your design and make any necessary changes to its aesthetics or functionality. 3D printing has helped drive the costs down of prototypes, so this is one technology you may want to consider using. Keep in mind that prototyping costs vary depending on size, complexity and volume of part. (Estimated costs: $5,000-plus for design work and $500-plus for 3D printing iterations)
  • Certifications & Testing. Most products require some type of certification to be sold in various countries. (This is especially true if your product has an electronic component.) Entrepreneur has a list of certifications that could be required for your product (here). (Estimated cost: $10,000)
  • Intellectual Property. Patents allow you to secure all rights and claims to your invention. Filling a design patent is going to cost less than a utility patent, but the protection rights are also different. However, both types of patents let you use the coveted phrase, patent pending. It is always best to consult with a patent attorney to discuss the needs of your individual product. (Estimated costs: $2,000-plus)
  • The Retail Package. The retail package is integral and is in many ways the ‘face’ of your product. It must be both protective during shipping and help your product standout on a crowded shelf. (Estimated cost: $3,000-plus)
  • Manufacturing. This is likely going to be your largest expense, which means that finding and vetting manufacturers is to your advantage. While small batch runs are feasible with 3D printing, larger batches are going to require mass-manufacturing. Injection molding costs run high because of the expensive steel molds required. (Estimated costs: $40,000-plus)
  • Traditional business expenses. This category encompasses business licenses, product liability insurance, office space, warehousing fees and shipping costs, etc. (Estimated costs: $1,000-plus per month)

If your product has electronic components you are also going to want to factor in these additional costs.

  • Electronics Design. This is the heart and soul of your product. It is what makes your product go and what helps it stand out from the competition. From a design standpoint, this is going to be the most expensive step. It is important to find a design engineer that has experience related to your design needs and clearly understands your budgetary requirements. (Estimated cost: $10,000-plus)
  • Software. If your hardware product is going to require a microcontroller or microprocessor, some level of programming will be required. In addition, if your product needs to communicate with a smartphone, a mobile app may also be required. (Estimated costs: $5,000-plus)

Here is what our President & Chief 3D Officer, Collin Kobayashi, has to say about hardware development costs, “Costs fluctuate with the specifications and requirements of your individual product. For example, a product that connects via Bluetooth takes more engineering than a device that just displays LEDs. It is always best to consult with design and manufacturing experts to get a clear answer on what your specific development costs will be.”

These costs do add up and it is easy to see why so many startups have turned to crowdfunding for their inventions. While crowdfunding is a fantastic resource, you need to nail down all of the costs required to bring your product to market first. Too often entrepreneurs underestimate the costs of bringing their product to market, and even after a successful crowdfunding campaign, can’t deliver on their promise to customers.

The most obvious example of underestimating costs is the Coolest Cooler, which was wildly successful and raised more than $13 million on Kickstarter in 2014, but over a year later many backers still have not received their coolers. Only after the Kickstarter campaign ended and manufacturing began, did the founders realize they set the price tag too low for the coolers—this one mistake has quickly turned into a nightmare scenario for the startup and the customers that pre-ordered through Kickstarter.

While all of these costs can and will fluctuate based on your specific product needs. These estimates are provided to help give you an idea on how much each stage in the product development process will cost, so that you and your team can plan accordingly.

Have questions about bringing your product to market? Let’s chat! Send your questions our way, info@3d-inovations.com

If you are looking for assistance in launching a product, check out our manufacturing and commercialization accelerator, Startup Connector.

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3D Innovations is a Product Development Company – from the 3D Design to a fully functional 3D Prototype & Product.

Startup Connector is a Manufacturing Accelerator helping companies commercialize—turning ideas into products.

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