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Problems we solve: What will be the eventual cost of my product?

6 August 2021

First of all, it is very important to define cost. Is this purely material cost (the typical BoM: Bill of Materials)? Or do you include assembly, quality, testing, packaging, shipping, and possibly even (retail) margin and VAT? Depending on your product, all these topics could apply and have an impact on your business case. Working your way back from your client’s point of view will help you define these line items. Doing this early on in your development will also set a clear target, even if it is based on assumptions and estimations. As trade-offs are a constant during design & development, having cost as one of the main design drivers is often a must. This target has to be re-evaluated and confirmed or adjusted whenever you gather new insights.

Secondly, the economy of scale is an important factor to take into account. Producing in higher quantities and allowing suppliers to optimise their process for you will reduce part cost. With this, a new range of production techniques becomes available. Often requiring a higher initial investment, but that will not outweigh the benefits in the long run.

To optimize this process, balancing tooling cost, initial batch sizes and making commitments is necessary. Often you start small, with little risk, so you can scale and redesign as you go. We advise to lay out a clear roadmap for your product combined with a forecast for quantities you are willing to commit to.

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