You’ve come up with a great idea, have a working prototype, and are eager to get your project on Kickstarter. But what will it cost to bring your idea to life? How should you price your rewards? And how do you set delivery dates that you can hit?
The answer to questions comes down to one factor in hardware projects: preparation. Product Planner is a Bill of Materials (BOM) manager and insights engine rolled into one. The BOM is the ingredient list that sits at the heart of any hardware project. From your first prototype to final manufacturing, Product Planner will ensure that your BOM data is complete and correct. It will also use your BOM data to help you look ahead, plan effectively, understand your costs, and avoid information gaps and pitfalls. The end result: confidence in knowing how much money you need to raise in order to bring your Kickstarter project to life, and a prepared, robust hardware project that avoids common pitfalls and adapts to unforeseen circumstances.
Understanding Material and Fixed Costs
Odds are, you have some of sense of your product’s material costs. You’ve built a prototype, and as you head into production, you’ll substitute your prototype parts for ones that are more production-ready. Throw in higher volumes, bulk discounts, and streamlined labor costs, and your production model will cost less than your prototype. Right? Not quite.
This is where fixed costs come into play. Electronic parts sometimes need certification. Your fabricated parts will need tooling. Setting up testing and production fixtures requires cash too. These costs fluctuate by product, part, and manufacturer. Product Planner helps you keep track of these costs. In some cases you can use Planner to get estimates for things like tooling costs.
Now that you've got a handle on your unit costs and your fixed costs, you'd think you'd be ready to go. What are we missing? Packaging.
Don't underestimate the importance of packaging in forming users' experiences of your product. If you think I'm exaggerating, head to YouTube and search for 'unboxing.' Finding the right packaging for your product is a design process in itself. When you've decided on the right look and feel for your packaging, Product Planner can keep track of the associated costs. And if you aren't sure where to start, you can include sample packaging data in Product Planner to get a rough cost estimate.
Complete Part Details, Cost and Volume Data
A complete BOM – one with no missing details – is essential to preventing design, supply chain, and manufacturing issues as your project progresses. It's no mean feat to find and track details for myriad parts, especially as you iterate on your design. You don't want to be putting out part selection and specification fires later. Now add in the challenge of different component costs at various volumes from different suppliers, and the complexity becomes almost unmanageable. Product Planner turns this into an exercise in filling in blanks we provide for part details, costs and quantities. That way, when it's time to build, there's no mystery around exactly what you need.
Find Your Break-even Point
Once you've figured out your BOM and understand your fixed and material costs, it's time to think about reward pricing and campaign targets.
The profitability of your product and the success of your campaign depend on how many units you intend to build and sell, and at what margins. Product Planner lets you easily experiment with a range of selling prices and quantities. Understanding this range of viable price-sales target combinations makes you better prepared to offer enticing discounts, or respond to competitors’ pricing changes. No matter how fast the market changes, you won’t be caught flat-footed.
Fortune Favors the Prepared
Hardware development is challenging because decision and oversights cast long shadows, their effects being felt months later. Product Planner gives you the satisfaction that your part data, cost information, campaign targets and reward prices are complete, optimized and set for success.
Dragon Innovation developed Product Planner based on their experiences helping hundreds of hardware entrepreneurs prepare for manufacturing. To help you see what you can do with the tool, Product Planner is available for a two week free trial for everyone. Get started here.