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Product Development Cost and Timelines

Tuesday, January 24, 2017

Acorn receives many inquiries around cost and the time it takes to develop a product from entrepreneurs and companies who don’t have product development experience. I thought we’d spend a few moments providing some insight into the process and major drivers for both cost and timelines.

 

First, let’s look at the major phases in product development:

 

Phase 1: Conceptual Design

 

Clients come to us with everything from ideas/sketches on napkins to completed PRD’s/MRD’s (Product Requirements Documents/Marketing Requirements Documents). The conceptual stage is where the concept for the product is developed, along with an architecture – the latter being what are the major building blocks for the product and how will they operate together. For a purely mechanical device, this stage includes the development of sketches and 3D models of the various pieces of the design, as well as the overall design itself. It may include industrial design, which will focus on the look, feel, and human interface/factors. This phase begins with a clear and detailed description/specification of what the product is, how it works, and as much performance specifications as can be determined – things like operating temperature, weight/size constraints, cost targets, anticipated production volumes, target customers, etc.. Engineers will assess the viability of meeting those specifications, cost targets, etc. while developing the architecture of the design.

 

The output of this phase may be a physical, non-functional model of the product, or a 3D rendering, or both. Often, multiple designs are developed and a down-selection occurs with a single design to move forward with.

 

As you can imagine, the cost and timelines associated with this stage can vary widely – but generally the minimum duration is 1-2 weeks, with fees generally starting at $15,000 – 20,000, but can range as high as over $1M, depending on how complex the product is, how many iterations of the design are done, if there is usability work that needs to be done, whether there are electronics involved, etc..

 

Phase 2: Detailed Design

 

Now that we have a high-level design developed and selected, we move to the detailed design phase. This is where the details of each of the components (eg., size, shape, material type, etc.) are specified and designed, and simulations/analysis done to insure they meet the requirements. Many designs utilize a combination of “off the shelf” components and custom designs – during this phase those components are selected and/or designed, and usually analyzed and tested (utilizing software tools as they are still models) to insure they will meet the specific requirements. During this phase, Acorn also looks the manufacturability and source-ability (ie, are there suppliers that can provide the components in the quantities and pricing needed) of each of the components.

 

The output of this phase is a comprehensive set of documentation (CAD drawings) for the entire system, including each of the components, the entire system and how the parts fit together, the manufacturing tolerances for each of the components, simulation results, etc. – all the information needed to develop a 1st working prototype – the latter of which is generally also an output of this phase.

 

This length and cost of this phase can vary even more widely than Phase 1 from several weeks to well over a year, with costs that generally start at $25,000 and can reach into the millions if not tens of millions of dollars.

 

Phase 3: Prototype Testing and Design refinement

 

The “moment of truth” – you’ve built your first prototype and now you need to start testing to see how well it performs. You’ll likely need to make some tweaks/modifications as a result of the testing, perhaps modifying individual parts, subsystems, software, etc. You may also need to make modifications in preparation for volume production – perhaps changing materials, running the product thru certification testing and making any adjustments as needed, etc. This phase generally starts around $25K and can also cost well into 6 figures including certification if required, taking several months.

 

Phase 4: Transfer to Manufacturing

 

The last phase is where the design is handed over to manufacturing – for Acorn, this process is occurring to some degree during our entire development process, so there are few if any surprises or radical changes that need to occur (vs. a “throw it over the wall” approach). High volume tooling production generally occurs during this phase (if required) which can be fairly expensive depending on the size, complexity, and number of tools required – these tools can range from several thousand to hundreds of thousands of dollars each. Development time for tooling, along with the time it takes to ramp up manufacturing can take many months and require some level of investment as well. Again here, the cost can range from $25,000 to over $1M for very complex systems with large tooling.

 

Don’t underestimate the time, effort, and investment it takes to bring a product to market – what may look simple on the outside likely had a fair amount of investment and effort to make it a reality.




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