I am currently going through this exact same process. I have no outside investors, so I am 'bootstrapping' it.
Here's what I've learned so far.
There's more details to consider than I would have thought possible. Packaging, technical manuals, repair manuals, software CD's, shipping, warehousing space, final assembly space, not to mention the actual product design.
I have it easy I suppose. My product is relatively simple for an electronic device. Circuit boards cost about $4 each without components or assembly. One part of the unit is in an off the shelf case (about $1.50), and another part is an injection moulded part of my own design, manufactured at emachineshop for about $1.70. Tooling cost for the mould was a little over $400 if I remember correctly. All together, the device costs about $60, and sells for $129. Higher volumes would obviously bring the cost down significantly, but then I would need a distribution network, which generally raises the cost back to where it was for low volume production.
I can conceivably manufacture about 20 or so per day, using my current processes. Better equipment, specifically a professional reflow oven, would increase that number to mabye 50 units per day. My facility is not especially high-tech nor large, and I am the one and only employee (makes payroll very easy). I still have my day job of 40 hours, so I don't see the family much...
It's a tremendous amount of work, and, thinking about it now, it all started out of personal need. Making the first one is what cost so much money, so I figured that with each one that I sell, I can offset the initial cost. In total, to get where I am now, I've spent about $5K, not including the few thousand hours of my own time. If I sell 100 of them, then the whole process didn't cost me anything but time. It's been about a year since I concieved of the device, and to date, I haven't sold a single one. Not that it isn't marketable, but because there's always one more detail to work through. I hope to be unveiling the device in the next few months.
One poster mentioned getting a patent. I researched that option and decided against it. Here's why.
Typical patent fees run upwards of $10K. You can get Patent Pending status quickly, but the actual patent can take years. Then what? Then nothing. Until someone uses your patented idea. Usually goes like this:
You start producing the best Widget ever. You have great sales and make some money, let's say $100K. Wong Chow in China sees your infomercial, and using his inexpensive labor, reverse engineers, and then produces your patented Widget for half the price. Your go shopping one day, and see your Widget on the shelf at the local dollar store. You call your lawyers and they start the paperwork. It takes about 10 years, but you win the case. Wong Chow is forced to stop producing your Widget. But wait, your patent ran out 3 years ago. He never has to stop producing. You've spent a couple 100K on the lawyers and associated fees. In fact, you spent most of the money you made in the first place. In the end what did the patent get you? Most likely, a bunch of grey hairs.
Now for the big guys, they have teams of patent attourneys on staff, as well as the lawyers to battle the competition in court. They can get things done far cheaper than the small guys. I'm not saying that there's no need whatsoever for a patent, just that you have to look at the whole situation before you start the process. One thing to note is that once you start selling your product, it gets difficult, if not impossible to get a patent issued on it (after the fact that is).
So, I have no big investors, no patent, no factory, no formal knowledge of any of the required fields, and yet, I'm still plugging along. I have no illusions. I will not be made a millionaire. Will I break even? Hopefully.
Just to make my first point a little more clear, here's a s
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These are all good comments/suggestions.
I am currently going through this exact same process. I have no outside investors, so I am 'bootstrapping' it.
Here's what I've learned so far.
There's more details to consider than I would have thought possible. Packaging, technical manuals, repair manuals, software CD's, shipping, warehousing space, final assembly space, not to mention the actual product design.
I have it easy I suppose. My product is relatively simple for an electronic device. Circuit boards cost about $4 each without components or assembly. One part of the unit is in an off the shelf case (about $1.50), and another part is an injection moulded part of my own design, manufactured at emachineshop for about $1.70. Tooling cost for the mould was a little over $400 if I remember correctly. All together, the device costs about $60, and sells for $129. Higher volumes would obviously bring the cost down significantly, but then I would need a distribution network, which generally raises the cost back to where it was for low volume production.
I can conceivably manufacture about 20 or so per day, using my current processes. Better equipment, specifically a professional reflow oven, would increase that number to mabye 50 units per day. My facility is not especially high-tech nor large, and I am the one and only employee (makes payroll very easy). I still have my day job of 40 hours, so I don't see the family much...
It's a tremendous amount of work, and, thinking about it now, it all started out of personal need. Making the first one is what cost so much money, so I figured that with each one that I sell, I can offset the initial cost. In total, to get where I am now, I've spent about $5K, not including the few thousand hours of my own time. If I sell 100 of them, then the whole process didn't cost me anything but time. It's been about a year since I concieved of the device, and to date, I haven't sold a single one. Not that it isn't marketable, but because there's always one more detail to work through. I hope to be unveiling the device in the next few months.
One poster mentioned getting a patent. I researched that option and decided against it. Here's why.
Typical patent fees run upwards of $10K. You can get Patent Pending status quickly, but the actual patent can take years. Then what? Then nothing. Until someone uses your patented idea. Usually goes like this: You start producing the best Widget ever. You have great sales and make some money, let's say $100K. Wong Chow in China sees your infomercial, and using his inexpensive labor, reverse engineers, and then produces your patented Widget for half the price. Your go shopping one day, and see your Widget on the shelf at the local dollar store. You call your lawyers and they start the paperwork. It takes about 10 years, but you win the case. Wong Chow is forced to stop producing your Widget. But wait, your patent ran out 3 years ago. He never has to stop producing. You've spent a couple 100K on the lawyers and associated fees. In fact, you spent most of the money you made in the first place. In the end what did the patent get you? Most likely, a bunch of grey hairs.
Now for the big guys, they have teams of patent attourneys on staff, as well as the lawyers to battle the competition in court. They can get things done far cheaper than the small guys. I'm not saying that there's no need whatsoever for a patent, just that you have to look at the whole situation before you start the process. One thing to note is that once you start selling your product, it gets difficult, if not impossible to get a patent issued on it (after the fact that is).
So, I have no big investors, no patent, no factory, no formal knowledge of any of the required fields, and yet, I'm still plugging along. I have no illusions. I will not be made a millionaire. Will I break even? Hopefully.
Just to make my first point a little more clear, here's a s