Launching a Product - How much does it cost to make a prototype?

Hello, my name is Ian Peterman. I'm CEO and founder of Peterman Design Firm, and today we're going to answer the question, how much does it cost to make a prototype? And, you know, not to hold out the answer to the end, the short answer is It's a really wide window of cost, but some examples for you would be, you know, something that's relatively simple, no electronics. We're talking about something like sunglasses or wallets, more accessory-type products, simple products that You know, don't have any electronics in it and they have a part count of under, under, let's say, about 20 pieces. I mean, there's no more than 20 individual parts that have to be made and assembled in order to create it. You know, those kind of prototypes we see in a range from, you know, a couple hundred dollars if it's mostly off-the-shelf parts. Or even some 3D-printed parts can be relatively cheap depending on the scale. All the way up to several thousand dollars. It just depends on the quantity and size. Size is actually a huge part of the cost in prototyping. So when you're talking about prototyping, you know, use my pen example again. Prototype a pen, it's not going to be that big. You know, 3D print this, it will probably cost a few hundred dollars tops to 3D print pieces. Put it together and make, make a little pen prototype. But if we're looking at, you know, let's say something a little bit bigger, maybe laptop, laptop size, or even chair that I'm sitting in right now. You know, it's— it may seem really big because it takes up a seemingly large amount of space, but if you break down a chair, it's actually Smaller pieces that have been put together. So, you know, the seat, back, center post, legs, those are all relatively moderate-sized parts. They're nothing really big. You know, we're not talking about furniture. So say the couch behind me, prototype that couch, it's going to take a significant amount more than my chair, even though size-wise, volume, you know, when you look at it. The apparent volume is, you know, this is maybe twice the size of this, that's going to take a lot more material than just twice as much of the chair. So size-wise, your scale of size is going to really matter, and there's ways to get around that. So, you know, they don't— When designing a car, you don't start by creating a full-scale model of a car. Or even full-scale prototype design, you start smaller, start with a smaller scale. So your prototypes, you can scale them down. They don't always have to be the exact production size. So we've done that with things like even electronics, even things that you have to hold. If it's easier to shrink it down just to get an idea of the form, then shrink it down, make it smaller. Don't worry about the scale necessarily at the beginning. Obviously, production prototyping and things like that is going to have to be done at scale. Your user testing models are going to have to be at the actual scale. But for especially form models, and that way you can reduce costs, you can definitely cut your costs. to prototype just an idea of something by 70-80% just by shrinking it down a little bit. So keep that in mind when you're costing out your prototyping scale. You can scale things down, and we do that with clients. I've done that quite a bit, shrinking something down, making it a little bit cheaper. Also makes it easier to ship. I don't really see shipping a whole car prototype to someone, but I can make a little model, a 1/32 model, 1/16, pretty common scale ranges. And so think about that when you're prototyping. That will help reduce the cost. Now, if we're talking about as soon as you start getting electronics into your prototypes, your prototypes can quickly double in cost depending on what you're trying to do. If it is something that is relatively simple, let's say, to give the example of an alarm clock, that's probably an off-shelf. You're probably not going to do a huge amount. And I'm talking about like analog. It's not, it's not as smart. You're not, you know, let's say, has a motor in it or a small LCD display. It's not Bluetooth enabled. It's not a speaker. It's not— doesn't have all those bells and whistles attached to it. And so every, every system that you add you know, you could be looking at another $1,000 to several thousand per system for a prototype. So you want to add Bluetooth in? Great. Now you have to code, code your system in order to handle the Bluetooth so it actually does something. And that's where electronics can get very expensive very quickly because there's so many systems. Now, prototyping we can get away with a lot of things and reduce costs in prototyping by using off-the-shelf components. So instead of trying to buy a custom and get a custom-made device that has custom Bluetooth system, you buy an off-the-shelf system, you use off-the-shelf software, you connect it all, and you just let it basically work on its own. And so that's, that helps with the pricing, but oftentimes You know, once you get into that, the prototypes can be thousands to tens of thousands of dollars for electronics, and that's at the low end. Prototyping something like a laptop, a tablet, smart device, you could be looking at quite a bit more just because of just the— so many additional services and expertise is needed to bring in. You aren't just having a mechanical designer design a physical form, or an industrial designer, mechanical engineer. Whoever's doing that, it's not just one person. Like, one person can design the form. That's great. But typically you need— once you get into electronics, you want to have somebody else. Now you're at least a 2-person team. Now you want to add smart device. You want to add coding, Bluetooth enabled, you know, different, different connectivity parts to it. Now you're integrating multiple systems. Now you probably need a software person. So you have a hardware person, you have an electronics person, you have a software person. Now you have 3 people just to make, let's say, a smart alarm clock. You have at least 3 people now involved in order to make those systems all be developed and tested and build a prototype for. And so now you're— and you can also be looking at multiple vendors, right? You're one person, 3D print or will make your physical enclosure for your device, right? And you have one person that creates software, and you have a third party that creates the electronic prototype. And sometimes you can get off-the-shelf parts and make it work that way, but you're going to at least do some breadboarding or something like that. And so your cost for electronics easily begins to double and triple because now you're using 2 to 3 at least different times more skill sets than you are for something that is not electronic in any way. And so that's why those, those pieces, when you move out of, out of just physical product that is no, no electronics— by no electronics, I mean there's no motor controllers, there's no nothing in there that requires Any electronics really, at least no moving parts. You know, you can get away with a lamp, you know, flip a switch, turn it on and off. Those are off-the-shelf parts. Those can easily do mechanical, doesn't get too complicated. So, you know, if you were going to do— Protect this little lamp here. Nothing too crazy, capacitive touch, a light bulb. Shade, body, plugs in. That's not really going to cost a lot. Like that lamp, for example, probably cost $2,000 prototype tops, and that's including the electronics portion. It's buying off-the-shelf parts and all that, and you might even be able to get 2 prototypes out of that, out of $2,000. Just depending on what manufacturing process you get and if you can get a discount for getting multiple parts made. So, and that's something to keep aware as well. You know, one prototype sometimes can be so close in price to 5 prototypes in terms of part cost because you get volume discount. So that can also help with costing. If you need 5, just get 5 up front if the price is really close, because you at least have 5 to play with, break, test, whatever you need to do. It really allows you to have a little bit more flexibility in your prototype and what you can do with it. And then the other costs, though, if we're talking about You want to develop— if you want to develop your own smartphone, you're going to be looking at easily a couple hundred thousand dollars in prototyping, just because you're going to have to prototype a lot and you're going to have to do a lot of coding. If you want your own operating system, that's a whole nother layer. So with all of this, the question of how much does prototyping cost, you can see I've just gone through a bunch of different variables just in talking about And you know how to cost reduce in prototyping. And I've seen, I've seen prototypes that they were literally $15 for one, and I've seen prototypes where the prototype cost several hundred thousand dollars for one, and that's just one to get made able to work. You know, that's— I've looked at and worked with Medical devices, a couple hundred thousand dollars isn't, isn't crazy at all because you end up selling— like, the device will, in production, will cost maybe $30,000, $50,000. A lot of times your prototype cost is anywhere between 10 and 1,000 times your actual production cost. So, you know, that's a good way to kind of estimate your range, which gives you a very wide range, of course. But, you know, smaller, less complicated parts, products, you're going to be looking at the 10x range. And, you know, for much more complicated— it obviously does not cost $100,000 to buy this phone, but it costs about $1,000 to buy a top-of-the-line, $600 for, for, you know, Second, not the flagship model, but second model, and you're going to be looking at, you know, quite a bit of money to be put into prototyping. So you're looking at more like 100x range to 1,000x range in prototyping costs and even covering development costs as well. So yeah, hopefully that gives you an idea, and honestly, you know, researching, getting quotes is part of the process. So, you know, something— you'll have a ballpark, and you always start with a ballpark. It's something that if you were— if you talk to someone, they say, oh, well, I guarantee you I'll prototype your new device, you want a new smartphone, I promise that I will get you a whole prototype, and I can give you a quote on the exact prototype cost. And you haven't finalized design or engineering, and they can tell you what it's going to take to go into production, one of two things. They've either done it, your specific product, so many times that they're going to be able to copy and paste from other designs that use common parts and just have basically a large catalog of parts that they just pull from. which means pretty much very, very little to nothing of your product will be custom because that's the only way you're able to do it and have an exact number is you can go through your part catalog and go, oh, well, we need these 10 components from here. We need these 15 over here. You add up those totals and there you go. Here's the cost of prototype. Otherwise, if you, if you have just an idea and you're And somebody gives you that, you haven't actually designed it. I guarantee you 9 times out of 10, they're not being honest at all. They're just pulling a number and saying it in order to get you to say yes to working with them. Because it's almost impossible to estimate that without actually having done your exact product multiple times or Something that we do is going through and doing a feasibility study or, you know, a gap analysis, and that involves talking to manufacturers, giving generalized specs of a product to manufacturers, to prototypers, and that's how you can start getting a number together. And if you don't have all of those specs defined, your quote and estimates going to be as good as your information that you give someone. And so if you have no information and you're getting a number, likely it's probably not an accurate number. And so something that we do when I, when I work with clients and they want to know a budget, we give a range and we basically say, here's our bucket of money. We're going to want at least X X number of dollars set aside for prototyping. We don't know exactly how much it's going to cost. And until we have gone through concepting, until we've gone through user analysis, until we've designed it, until we have created drawings and we know exactly what we're prototyping and which type of prototype— is it a form prototype? Is it a fit prototype? Is it a fit prototype? Is it cosmetic? Is it functional? Is it for your investors? Is it for user testing? There's so many different types of prototyping, so many reasons to prototype. Those hard costs, we won't even know until we know what the product is and what the release strategy is and how you're going to test it and use it. So we don't provide quotes on prototyping. And we tell all of our clients, we're going to have a bucket, we're going to start with that. And, you know, we can give some good ballpark, we give, you know, we give a good size bucket, we make sure that we look at past projects that were similar. And we go, okay, well, we think that it's going to cost this. And then we add some to it. Because we don't want to surprise people, we try to avoid, we'd rather go We're going to need $50,000 and only spend $30,000. That's a way better thing than saying, oh, it's only going to cost $30,000, and then, oh, but we need this extra thing because we made a change that we didn't realize. And we avoid that whole, you know, underbidding and change ordering client to death. We just create a bucket that's big enough to actually encompass it and go from there. And so— It's going to be an estimate, it's going to be a ballpark. Its whole point is to get close. And so when you ask that question of someone, what's it going to cost, I'll give a range. You ask me, I'll give you a range. Like, it's going to cost $50,000 to $100,000 to design and prototype this, but I won't know till we get going. And so just be aware, anybody that's guaranteeing you a prototype cost One of two things. They're either overcharging you so much that they don't care. They're like, oh well, it doesn't matter, we're going to charge you $150,000 and we think it's only going to cost $20,000, but we have such a huge margin of buffer in our cost that it costs 5 times as much to do, we still make money. Or they're going to end up change ordering you and they're going to say, oh, it's It's $20,000. And then after the $20,000 is used, oh well, it's another $10,000 and we'll, we'll have it for you. And then it's another $7,000. And then you just go and eventually you get to $50,000 and you've been delayed because the first scope only went to a certain amount of hours and a certain time. And so prototyping is ambiguous. Part. And unless you have fully defined product, you're not going to get an accurate number. And so just be aware of that and be okay with it. You got to be okay with there being ambiguity. It's product development. If there is a perfect formula, and I think we have a really good formula with our firm, but until you input enough information into the formula, it won't output any numbers that you're will be perfectly accurate. And so that's why it's all custom. It's all very tailored towards your exact product. And it's okay. Walk down the process, figure it out, and, you know, set budgets and you work from there. So hopefully that gives you some information around, you know, prototyping, the cost of Prototyping and how you're going to be able to walk down that path and see when you can figure out your actual prototype cost. All right, thanks.