Small Company Product Development Cost Reduction
Small companies in niche markets know they can design better products, but can they sell enough of their products to pay back their investment? When unit volumes are low, the cost of developing the product can sometimes exceed the manufacturing cost.
Here are a few tips for reducing product development cost in a small company:
Reference Designs: Find a design that is close to your needs. This can be licensed from another company or from a product development company. Starting half done is an easy way to reduce cost.
Reduce Fixed Cost: Generating processes and systems for developing products costs money. CAD systems, drawing control, hiring staff, etc., all cost money and management time. Utilizing a company that already has these in place can avoid these costs.
Follow a Process: Doing work twice is expensive. Lower the risk that “development has to be done over” by following a documented development process with clearly defined gates.
Find Experts: Experts are more efficient than “jacks of all trades.” Small companies often can’t afford to hire engineers that specialize in one thing but often these experts can be hired by the hour.
Design-Build: Some CMs offer design/build services. You give up a portion of gross margin in exchange for reduced development cost. Because the CM is an integrated development/manufacturing company, they can often develop products for a lower cost than starting from scratch.
What will your project cost? Download our estimate template to find out: Click here.