Why does Product Development cost so much?
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Take a look at some of the reasons you may think Product development costs so much, and a few money saving tips.
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Why does Product Development cost so much?
- 1. A Better Way for Small Companies to Develop Products Finish Line Product Development Services and a few ways to lower the cost
- 2. • Q4Y2014 R&D Cost 46.07M • Q1Y2015 R&D Cost 49.44M • Q2Y2015 R&D Cost 58.45M • Q3Y2015 R&D Cost 67.37M • That’s $221,330,000 per year, or $4.25 Million per week. • Note - spending is increasing with time. GoPro Cost (Single Product Company)
- 3. • Number of R&D Employees = 130 (Forbes, Mar 2003) • R&D Cost (2013) = $73.74M • Spend per R&D Employee = $567,270 • Average Hourly Cost of Engineer = $295/hr • Outsource Hourly Cost (Survey, PSVilage 2012) = $200- $250 • $85% of Product Development Cost is People Cost Where does all that money go?
- 4. Because people are extremely expensive - especially smart, highly educated ones. Reducing the amount of time it takes to develop a product is the key to reducing cost Why Does Product Development Cost so Much
- 5. • Follow a process • Make sure you do the right thing • Make sure you do it the right way • Find reference designs - OPD, Vendors, Tangential Markets • Use Experts, avoid having people learn on your nickel • Use a Gating Process • Kill projects that no longer make sense, even if you already spent a lot of money • Hire the best team possible from day one and stick with them - even if they do not tell you what you “want” to hear. Ways to Reduce the Amount of Time/Cost
- 6. • Hire cheap people • Believe: “Processes, we don’t need no stinken processes” • Take short cuts • Have unrealistic budgets and schedules • Switch teams every 5 minutes - always looking for the next “water walker” • Hire the team that tells you what you “want” to hear Do NOT:
- 7. Finish Line PDS is a team of talented product development engineers; electronic, mechanical and software. Each of us comes from a rich set of Industry experience and this diversity provides a very unique team capable of providing innovative products. Our focus is developing products for our customers that are successful in the market place. We understand that we both win when the products we design and manufacture for you earn a profit. – We’ve completed over 1000 projects for over 250 companies – Incubated two Successful Start-Ups – Opened in 2002 – 30+ Patents We reduce your development cost, lower your fixed cost overhead, decrease your time to market, increase your quality, and simplify your life. Contact me today to learn how we can help you Steve.Owens@finishlinepds.com 603-880-8484 Finish Line PDS
- 8. Thank you!