Watch this video to understand why it worth developing a new product idea. The video explains the pros and cons so an informed decision can be taken. Full transcript below.
Whiteboard Wednesday – Why you SHOULD Develop a New Product
So, let’s get straight into it. This video is all about why you should develop your own product. We’re going to look at the negatives of doing that and we’re also going to look at the positives and why it’s such a great feeling when you start developing your own idea, and then you see it all the way through and then it’s on the shelves the thing that you have designed and taken from concept right the way through to a market ready product.
The first main reason that you should develop your own product is that you can create a key unique selling point. If you just saw something that’s very similar to other products already out there all you’ve really got to compete on is price and eventually maybe brand but if you’ve got a key selling point then actually you can compete on that and as you’ll see through some of these other advantages. You can also charge a bit more and make a better margin which leads us nicely into this second point.
Then better margin comes from two things one that you’ve got a unique selling point which is a reason that people are prepared to pay more for that product than the competitive products, but the other thing is because you’re developing your own design you can pay less for it most of the time when you buy a factory design product they will put into your unit price something for the time they’ve had to put into designing and prototyping and the tooling costs they’ve got and everything else and they’ll charge a premium for all of that. They’ve also had to market that product and they need to recoup those costs as well but those costs aren’t there when you go to a factory and ask them to design your product and as such your own unique design will probably cost you a lot less in terms of your unit cost per item.
So the third point is about security of supply and we’ve had quite a few clients come to us who have over the years built up a brand and marketing material around a product and they’ve got customers wanting the next batch but they can’t get a hold of it because it’s a factory design product and that factory stopped making it doesn’t want to supply them anymore. It’s done a deal with someone else or even a shutdown real problem for this company that’s invested all this time and effort into creating a real sales campaign and marketing campaign around that item. Now if you design your own product that isn’t a problem if the factory suddenly decides they don’t want to make it anymore then what you can do is take it to a different factory and they can make it instead and that basically means you’ve got that element of competition and you can always ensure that your product will be supplied. You’ve also got more control over your costs and again we’ve had people come to us over the years who said I’ve been selling this product from China I’ve been making good margin the factory all of a sudden has put the price up by 15 now if you’ve got your own product then you can shop around with some other factories try and find someone who’s going to do it cheaper without compromising on the quality or you could look to value engineer your product with your current factory and negotiate with them and work with their team to try and reduce that price back down again. However, if you’re just buying an off-the-shelf factory design product and those options don’t really exist consistent product now this is also critical.
We had a electric wheelchair client they were buying in their wheelchairs from a Taiwanese manufacturer and every time they got a batch something was different they changed the colour of this or they changed materials here or they added a feature they took something away and that caused them a real headache because they were constantly having to update and change their marketing material because the product was always different.
Well, if you designed your own product then you’ve got a specification and you’ve got a gold sample and the factory has to produce to that and if they don’t it’s rejected in quality control and that batch of product never even leaves the factory so that gives you much more certainty and much more control. You can also use market insights that you’ve got to design a better product so this can be critical if you’ve got a whole load of reviews and maybe you’re finding that you know occasionally a particular thing on your product breaks or the customers really love it apart from this feature doesn’t work correctly, but you can take all of that feedback and then you can design a better product, and that better product will get you better reviews which overall means that obviously you’ll sell more product and you’ll make more money.
Let’s go on now and look at the negative side of things so developing your own product costs a lot of money. Professional design services like the ones that we provide at D2M prototyping tooling with the manufacturer maybe there are production setup costs all of that is going to cost probably thousands of pounds and in some cases tens of thousands of pounds.
So do go into this process with your eyes open it is not cheap, it’s also going to take a lot of time and effort but don’t get me wrong sourcing good products also takes quite a lot of time and effort but the minimum to develop a simple product is going to be about six months from initial concept through to manufactured item and if it’s a complex product with electronics or those kind of things it might take two years to go from that initial idea through to a production ready product. So bear that in mind as well. It’s not quick and often if you try to rush it you’ll end up with bigger problems or more costs.
The final point on the negative side of things is that often if you have a unique product then you’ll have to order a higher minimum order quantity from your factory and again if you’ve got a relatively simple product or maybe a textiles product like a rucksack the minimum order quantity might be 500 pieces, if you’ve got an electronics product the minimum order might be 1500 or 2000 so that gives you some kind of idea, and obviously that’s going to be a lot more of an investment than if you just went and bought an off-the-shelf factory designed product but the minimum order quantities are likely to be in the low hundreds so just bear that in mind as well.