Product Commercial Viability Assessment
Establishing if your project is commercially viable from the perspective of required investment and also if the numbers are likely to stack up once the product is on the market.
A key part of the commercial viability assessment is to understand the ball park unit costing and tooling estimate for your product from our trusted manufacturing partners whom, in our experience, work to a high standard and provide low minimum order quantities (MOQs). This can include European and Far East quotations to help gauge where might be appropriate to manufacture your concept. This stage can therefore be used to work out if European manufacture is a viable option for your product.
Contact us to book a one to one free consultation to discuss how we can help develop your product.
What is a Commercial Viability Assessment?
A commercial viability assessment looks to provide an approximate unit cost for your product and the production setup cost including tooling.
These two numbers are critical to the viability of your project for different reasons.
Unit cost is critical for establish future margin on your product and an early steer on this can provide reassurance to continue to invest in the project and reassure other stakeholders. We also look to improve margin for our client where possible as this inevitably is the biggest component of future success of the product.
Example for entrepreneurs considering their profit margin:
Unit Cost is vital for establishing if your concept will be profitable after launch. For example, if your customer would pay £100 for your product and it costs £60 to make, then it probably won’t be viable. This is due to other costs such as shipping, import duty, VAT, the cost of marketing and the margin that a retailer would expect to sell your product. Most companies would look to make a product for 20-25% of the retail price.
What might happen during this stage?
- Detailing a Design Brief
- Signing NDAs with potential manufacturers.
- Initial discussions with potential manufacturers.
- Sourcing and costing particular materials and/or off the shelf components.
- Comparison with existing products.
- Review of component material selection.
- Review of production method with 2-3 potential manufacturers
- Estimates provided by manufacturers.
- Basic costing exercise for shipping, duty etc.
- Report outlining likely margin and necessary RRP based on likely unit cost broken down for specific routes to market.
This is a complete list of all potential requirements of this stage. It does depend on your project and your specific requirements and therefore all of these elements might not be necessary in your case.
This stage provides a commercial sense check to establish if it is financially worth proceeding with the idea.
This stage sometimes is the end of a project, equally it can simply signal a change in direction. For example, a recent project went through this stage and it was established as unviable. So instead the product was altered and made more premium and became a gift product that could command a higher price point. We tested this with market research and proved that this new option would work commercially.
This stage also produces a rough estimate of the cost of getting your product to market. This can be very useful when planning your investment strategy and speaking to investors. With electronics products and/or plastic products needing large or complex mould tools, these cost remain unknown until this type of assessment is conducted.
Often a client will want to protect their Intellectual Property before this stage.
Click here for further information: Protecting your product idea.
What value does this stage add to my project?
How much and how long?
Generally this stage should take two to four weeks to be done thoroughly. Cost depends on complexity but varies from around £1200 to £2000. Generally a small product with only a few components and no electronics would be at the lower end and a complex product with inbuilt electronics and mechanics and over 50 components would be at the top end.
Why use D2M to do this stage?
Three simple reasons:
- We are focused on your commercial success of your project.
- We have developed a wide range of products across a range of different industry sectors and so are uniquely placed to cost projects early on in development.
- We have a diverse manufacturing base across 3 continents who we can approach to help plan and cost the production of your product.
Contact us today to discuss your project and to learn more about how we can help develop your project: Contact us.
If you would like to find out more about project viability and managing your risk click here.
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