How can we reduce production costs for a new product?

Hello, my name is Ian Peterman. I'm CEO and founder of Peterman Design Firm. On today's episode, I'm going to talk about how to reduce production costs for new product. So there's a few different ways that we can do this, and I'm going to talk about using off-shelf parts, Reducing initial order cost, less expensive materials, less expensive manufacturing processes, and fewer parts. So first, let's talk about using off-shelf parts. I think I've mentioned this in, in at least one other video. Using off-shelf parts is a great way to reduce costs if it's something that can use an off-shelf part and you do not have to use a fully custom part. Then using off-shelf part is going to reduce your costs, sometimes very significantly. It's— it can be a huge impact to your bottom line of production because you're using somebody's product that's mass-produced, potentially millions of units a year, and they're going to be a lot cheaper than you trying to make your own part. The other way to use off-shelf parts that can help reduce costs is to take off-shelf parts and modify them. So this is done very often as well, where you do need a custom product, but instead of doing it completely from scratch, you find an off-the-shelf product that is close to what you need it to be, and it's something that you can purchase, bring in-house, or take to a shop, and they can take it and modify it to your more specific requirements. And that's an additional way that can help kind of bridge that gap between custom, a fully custom part where there's nothing on the market that can be purchased to do that feature or provide that support or whatever that part does. But you're able to take something that is off-shelf, reduce some of the costs, And then just modify, spend that little bit of extra in order to modify it to make it work for the product that you're developing. Next area I want to talk about is reducing your initial order costs. So production costs often comes down to quantity. How many are you going to order? So one of the things that's done for especially startups and and getting a product off the ground is reducing your initial order cost, and it can be done negotiating with your vendor, finding different. Vendors that are able to do a lower quantity, and even working with a separate vendor initially that does specialize in low-volume production in order to have as low of an initial cost as possible on the order for your actual first-run production. And then of course you'll step it up, and, you know, maybe you start with a couple thousand as a minimum order, and then you get to, you know, 20,000, and then you Then you may switch over. So maybe your first run, once you hit it, is great. And then once you hit 20,000, you may need to go to a different manufacturer that handles that volume. And so it can be, it can be really smart to look at that initial run and make sure you're ordering enough for what you want to do, but also don't order a whole bunch extra. And finding the right vendor that works in the production volume that you are wanting. Next, let's talk about using less expensive materials. Obviously, we don't want to develop a product that has a material that is inferior or reduces the quality or makes it so that a product won't function. Those are not— that's not what I mean by it. I mean looking at one material that is able to do the project and a separate material that's also able to be used in the same part, but There's many different reasons for cost of material changing. You may have different tariffs on it, you may have import-export, you may have a scarcity at a certain time. You can also have rise and decrease in value. So a great example of this is, you know, if your product uses silver or gold or anything like that, you can, you can easily track the cost and see when it goes up and when it goes down. And so that kind of Fluctuation. If it's a highly fluctuating material cost, then you definitely want to be looking at, you know, is there a more stable material in terms of cost-wise? Is does this material your first material may be really volatile? It may change costs. You may be really cheap, and then it goes really high, and you never know when you're going to order. And if you want to make sure that you have a little more stable, then maybe it's not always cheaper, but it's going to be overall less expensive by choosing a cheaper material. Next, let's talk about using less expensive manufacturing processes. So I've touched on this before and it's really important to look at how is your product being made. So not every manufacturing process is going to cost the same. Each one has its pluses and minuses. And so looking at different processes and how you actually produce the product, you can find ways sometimes to reduce costs. So if If you can use a cheaper process and still achieve the same product, then that's going to reduce the cost of your part. It's going to reduce the cost of your product. And so combining with materials, you may find this where you can use a slightly more expensive material, but you're able to use a much cheaper manufacturing process or vice versa. Either way, balancing those 2 you can find a way to reduce costs. And being aware of your manufacturing process cost is really important, just as much as it is looking at raw material cost. Last, I want to talk about using fewer parts. Using fewer parts is really important because fewer parts means less assembly, less manufacturer parts, potentially less vendors that you have to work with. And reducing all of those things will produce a cheaper part for you. It also makes, you know, if you're shipping less parts from manufacturers to places, then you have cheaper shipping, cheaper freight and logistics in between in order to make your part. Fewer parts means assembly is easier. So designing for assembly is really important, and fewer— obviously, the less parts you have to assemble, the easier it's going to be to assemble, and the easier it is to assemble, That means less time and less cost into it. So fewer parts can also really impact your timeline depending on how you're able to design it. If you're able to cut assembly time in half, then it's going to cost less and you might be able to actually get your product out quicker for a lower cost, which is always a win for everyone when that's able to happen. So reducing your part count is very important to helping reduce production costs. So I've talked about a few different areas. We went over using off-shelf parts, reducing your initial order, looking at using less expensive materials and manufacturing processes, and of course reducing your part count. And each of these areas will help— by looking at them will help reduce the cost that you have in production and allow you to produce more or work with a smaller budget. And be able to still launch your product out there. Hey, thanks for watching. We really appreciate our viewers, and if you haven't subscribed yet, please do subscribe to our channel so you can get more great videos like this in your feed, and like the video. If you want to learn more about the Peterman Design Firm, please check us out on our website, petermanfirm.com. You'll find link and information in The description, and of course we're on all social media as well, so check us out there. All right, thank you. Thank you.