When it comes to developing physical products, the costs of actually creating physical prototypes and manufacturing the final product drives the costs up in the development.

Through my product development services, I get to see many people betting on their own great ideas for a physical product and committed to bringing their product to life. Which is a good attitude in general, unless it is pursued blindly.

Most have their own estimation about how much prototype cost they can invest to make that happen. However, in most cases, their estimations are far from market reality.

Developing physical products is not only costly but it is challenging.

There are several activities that you need to consider to get a more accurate estimation of the total cost of developing a physical product. Most of these costs come from the number of hours that a specific professional takes to perform such activities multiplied by their hourly rate.

Let’s have a look at the main activities involved in the development of a physical product.

Concept Design

Typically, an Industrial Designer will sketch several conceptual options for your product idea. The final concept chosen will be refined to include more details on how the product works, materials used and cosmetic considerations.

Mechanical Design

An engineer will create the technical 3D design of the product and its different components considering material properties, production processes and functional aspects of the product.

Electrical Design

The technical design for the electronic boards, batteries, sensors, wireless connectivity, power management and programming of the main functionality among others.

Technical specifications

These are the additional files and documentation defined based on the final designs developed previously. On one hand, the mechanical specs, typically 2D drawings with materials, dimensions and critical parameters of each component and specifications for production. On the other hand, electrical schematics and layout files to fabricate the boards and tests to be carried out.


Several rounds of prototypes, from mock-ups to functional versions and pre-production small scale series. Costs include materials and labor costs.

Product Testing

The number of tests that must be performed in your product to ensure that it is reliable and meets the specifications. Some might be informal tests for engineering confidence but some are required by industry standards and regulations.

Production tooling

This is the tooling and list of equipment necessary to manufacture the components and assembly of the final product. For instance, if you need molds to be made for plastic or metal parts, tooling quickly becomes the highest investment in all the development.

Initial production series

The first production build of a few hundreds or even thousands of units to validate the production stability and quality. Includes all the materials and purchased components required to produce the units plus the labor cost of assembly.

The costs of each activity will vary based on the type of product that you are building. Let’s have a look now at the estimated costs by product category.

Design Category

In the Design category, we consider products that have an aesthetic aspect and a combination of different parts and materials and in some cases a mechanical mechanism.

These products do not incorporate any electronics or smart features.

In this category, you can find products such as lifestyle accessories, furniture, kitchenware, toys and outdoors equipment among others.

Categories: Uncategorized