Updated UK version based upon original Blog article by John Teel of Predictable Designs, USA.
Let me start with the good news – it’s possible. You can develop a hardware product regardless of your technical level and you don’t necessarily need to be an engineer to succeed (although it certainly helps).
Whether you’re an entrepreneur, startup, maker, inventor, or small business this guide will help you understand the new product development process. I won’t lie to you, though. It’s an incredibly long, difficult journey to launch a new hardware product. Although hardware is known for being hard, it’s also easier now than ever for individuals and small teams to develop new hardware products.
However, if you are looking for an easy, quick way to make money then I suggest you stop reading right now because bringing a new hardware product to market is far from easy or quick.
In this guide I’ll first discuss the product development strategies for both technical creators and non-technical entrepreneurs wishing to create a new electronic hardware product.Then, we’ll move on to developing the electronics followed by the development of the plastic enclosure.
But firstly we have to look at the business strategy.
Have you done your homework ?
I'm astonished by just how many entrepreneurs come to me with a great idea .... full stop...just something possible, just a eureka moment without daring to ask whether the world wants..or more importantly needs, that invention and without fully researching whether & how much the market is prepared to pay for it.
The first question I ask is "who are your competitors", and the scariest answer I receive is " there aren't any"
No perceived competitors means at least one, or both the following:
You haven't looked properly
There isn't a market at all
The mistake too many inventors make is to see their business as selling product, in reality you are actually solving problems, curing pain points. So the competition question you are asking is not "does anything else in the market do what my product does in the same way as I am doing it" but actually " In what ways are the problems my product addresses being resolved already" The answer to this question identifies your competition.
If the answer is still nobody, then you really have to question whether the pain is painful enough that someone will pay to negate it ? In the globally connected, capitalist motivated 21st century, pretty much every problem has been identified and someone will have tried to sell the world a solution,to it even if its an unsatisfactory one.
Have you got a business plan ?
Yes, of course you have ... its in a draw somewhere.
The actual business plan is most likely in your head, it is evolving so rapidly that there's no point in writing it out...again..
I have every sympathy with your prioritisation, however you really should assign some time to keeping that document up to date ( even if it will be out of date in a few days). Why ? Because
a) You get a completely different perspective when you document your journey and define your destination in a structured format that views your enterprise from a range of perspectives.
b) You are going to need to get funding at some point, and a funding decision will not be based upon how clever your invention is but how likely it is that the investors will see a good return for their money.
Brutal, I know, but investors are judging you as a business person, not just as an inventor. If you are not a natural, enthusiastic business person ( and there's no shame in being a visionary creator or an accomplished engineer ), then find a co-founder who is and make their top priority maintaining a Business Plan and Cash-flow Forecast.
Have you got enough money ?
Costing out your design, prototyping and production costs is fairly easy... well its logical and mathematical, you can gather the data and do the sums. In the next section we will cover what those stages are so you can apply them to your own project and get to a figure.
What is far more difficult to forecast is your cost of sale. ( yes, I know a product as great as yours will sell itself ... but when you wake up from your fantasy the cold hard truth is that it simply wont unless your target customers know it exists.)
Let's start with some industry norms. An established consumer electronics company spends around 10% of gross revenues on Marketing.( That does not mean that whilst your revenues are zero you can get away with 10% of nothing, as one of my pre-revenue start up clients proposed! ). What that actually means is that your competitors ( remember them, the ones you didn't think you had) will be spending at least 10% of their revenues on marketing, so that is your barrier to entry. That is the figure you have to keep in mind if your message is going to be heard above the existing noise in the market.
You probably don't want to be selling directly, so you will need to plug into an established route to market ( distributor and /or retailers), For an unknown brand expect to sacrifice half of the RRP. Oh and they will only fulfil demand, not create it, so this doesn't let you off the marketing budget. They will also need managing, carefully ! Another high priority job for your co-founder.
Whilst it might be possible for a Software as a Service type technology business to bootstrap its way to market momentum (provided the technically gifted founder has deep enough pockets and a modest enough lifestyle,) hardware is a completely different world.
The upfront costs of simply getting to a Minimum Viable Product are huge. Believe me, you will need investors and for that you will need your market research, business plan and revenue forecasts up to date at all times. Why at all times, because you should be building relationships with investors from day one and every time you promote your business in any forum there might be investors present who will casually say something like " oh that's interesting, send me a business plan", they will expect it the following day.
So, if there are investors stalking me at every turn ( I hear you cry) then why don't I just contact them when I need them ?
The reason why investors put so much effort into courting start ups is that the vast majority of investment opportunities fail the evaluation process. It is really hard work for an Angel investor or, more usually a fund manager, to find a credible company to invest in, and even when they do they expect to lose money on many of those investments, so the ones that deliver a return have to have the potential to show a significant return, enough to also cover the losses on the ones that fail.
Angel investors have to kiss hundreds of frogs before finding a princess, so interest from an angel is just the starting point, you will be months of investigation, qualification and diligence away from anyone signing a cheque, if they ever do. You need to be at an advanced stage of trust building with multiple sources of funding at the point where you actually need the money.
Build a trust relationship with investors early and don't rush to close the investment deal till you have a credible investment opportunity for them. They must like your product, but they are primarily investing in your business !
There are essentially five options for entrepreneurs and startups to develop a new hardware product. However, many times the best overall strategy is a combination of these five development strategies.
This is rarely a viable strategy completely by itself. Very few people have all of the skills needed to develop a market-ready electronic product completely on their own. Even if you happen to be an engineer, are you an expert in electronics design,programming, 3D modelling, injection moulding, and manufacturing? Probably not. Also most of these specialities are made up of numerous sub-specialities. That being said, if you have the necessary skills, the farther you take the development of your product yourself the more money you will save and the better off you will be in the long run. However, If your sub-expert skills cause you to develop a less than optimal product then that is a big mistake. Always bring in experts to fill in any gaps in your expertise.
If you are a non-technical founder then you would definitely be wise to bring on a technical co-founder. One of the founders on your startup team needs to, at the very least understand enough about product development to manage the process. If you plan to eventually seek outside funding from professional investors then you definitely need a team of founders. Professional startup investors know that a team of founders is much more likely to succeed than a solo founder. The ideal co-founder team for most hardware startups is a hardware engineer, a programmer, and a marketer. Bringing on co-founders may sound like the perfect solution to your problems, but there are some serious downsides as well. First of all, finding co-founders is difficult and will likely take a tremendous amount of time. That is valuable time that isn’t being spent developing your product. Finding co-founders is not something you should rush and you need to take time to find the right match. Not only do they need to compliment your skills, but you also really need to like them personally. You are essentially going to be married to them for at least a few years so be sure you get along well.The major downside of bringing on co-founders is they reduce your equity in the company. All founders of a company should really have equal equity in the company.So if you are going solo right now, be prepared to give any co-founder half of your company.
One of the best ways to fill in any gaps in your teams technical ability is by outsourcing to freelance engineers. Just keep in mind that most products will require multiple engineers of different specialities so you will need to manage the various engineers yourself.
Developing a new electronic product usually requires a team of engineers. Make sure you find an electrical engineer that has experience designing the type of electronics required by your product. Electrical engineering is a huge field of study and many engineers lack any experience with circuit design.
For the 3D designer make sure you find someone that has experience with injection moulding technology, otherwise you’re likely to end up with a product that can be prototyped but not mass manufactured.
One avenue to pursue is partnering with a manufacturer ( such as Arista) that already makes products that are similar to your product. Contract Electronics Manufacturers ( CEM's) will have their own engineering and development departments and years of experience. If you can find a manufacturer already making something similar to your own product, they may be able to do everything for you – development,engineering, prototyping, mould production and manufacturing.
This strategy can lower your upfront development costs. Manufacturers will, however,amortize these costs, which means adding an additional cost per product for the first production runs. This essentially works like an interest free loan, allowing you to slowly pay back your development costs to the manufacturer. Sounds great and easy, so what’s the catch? Manufacturing partners are, effectively, investors so go back to the first section of this article and make sure you are investment ready before approaching one.
When developing a new electronic hardware product you should first start with a preliminary production design. This is not to be confused with a Proof-of-Concept(POC) prototype. A POC prototype is usually built using a development kit like an Arduino. They can sometimes be useful to prove that your product concept solves the desired problem.But a POC prototype is far from being a production design. Rarely can you go to market with an Arduino embedded in your product. A preliminary production design focuses on your product’s production components,cost, profit margin, performance, features, development feasibility and manufacturability. You can use a preliminary production design to produce estimates for every cost your product will need. It is important to accurately know the costs to develop, prototype,program, certify, scale, and manufacture the product. A preliminary production design will answer the following pertinent questions.
Many entrepreneurs make the mistake of skipping the preliminary production design step, and instead jump right into designing the schematic circuit diagram. By doing so,you may eventually discover you’ve spent all this effort and hard-earned money on a product that can’t be affordably developed, manufactured, or most importantly, sold at a profit.
When creating the preliminary production design you should start by defining the system-level block diagram. This diagram specifies each electronic function and how all of the functional components interconnect.
A block diagram specifies each function and the system-level connectivity. Most products require a microcontroller or a microprocessor with various components(displays, sensors, memory, etc.) interfacing with the microcontroller via various serial ports. By creating a system block diagram you can easily identify the type and number of serial ports required. This is an essential first step for selecting the correct microcontroller for your product.
Next, you must select the various production components: microchips, sensors,displays, and connectors based upon the desired functions and target retail price of your product. This will allow you to then create a preliminary Bill of Materials (BOM).
Selection of the production components is a critical first development step. You can purchase most electronic components from distributors in ones (for prototyping and initial testing) or up to thousands (for low-volume manufacturing). Once you reach higher production volumes you will save money by purchasing some components directly from the manufacturer.
You should now estimate the production cost (or Cost of Goods Sold – COGS) for your product. It’s critical to know as soon as possible how much it will cost to manufacture your product.You need to know your product’s manufacturing unit cost in order to determine the best sales price, the cost of inventory, and most importantly how much profit you can make.
It’s critical to estimate your production cost as early as possible.The production components that you’ve selected will of course have a big impact on the manufacturing cost. But to get an accurate manufacturing cost estimate you also must include the cost of the PCB assembly, final product assembly, product testing, retail packaging, scrap rate, returns, logistics, duties, and warehousing.
The schematic diagram shows how every component, from microchips to resistors, connects together. Whereas a system block diagram is mostly focused on the higher level product functionality, a schematic diagram is all about the little details. Something as simple as a mis-numbered pin on a component in a schematic can cause a complete lack of functionality.In most cases you’ll need a separate sub-circuit for each block of your system block diagram. These various sub-circuits will then be connected together to form the full schematic circuit diagram.Special electronics design software is used to create the schematic diagram and to help ensure it is free of mistakes.
Once the schematic is done you will now design the Printed Circuit Board (PCB). The PCB is the physical board that holds and connects all of the electronic components.Development of the system block diagram and schematic circuit have been mostly conceptual in nature.
The PCB is designed in the same software that created the schematic diagram. The software will have various verification tools to ensure the PCB layout meets the design rules for the PCB process used, and that the PCB matches the schematic. In general, the smaller the product, and the tighter the components are packed together, the longer it will take to create the PCB layout. If your product routes large amounts of power, or offers wireless connectivity, then PCB layout is even more critical and time consuming.
)Although you should have already created a preliminary BOM as part of your preliminary production design, it’s now time for the full production BOM. The main difference between the two is the numerous low-cost components like resistors and capacitors. These components usually only cost a penny or two, so I don’t list them out separately in the preliminary BOM. But to actually manufacture the PCB you need a complete BOM with every component listed. This BOM is usually created automatically by the schematic design software. The BOM lists the part numbers, quantities, and all component specifications.
Creating electronic prototypes is a two-step process. The first step produces the bare,printed circuit boards. Your circuit design software will allow you to output the PCB layout in a format called Gerber with one file for each PCB layer.These Gerber files can be sent to a prototype shop for small volume runs. The same files can also be provided to a larger manufacturer for high volume production.
The second step is having all of the electronic components soldered onto the board. From your design software you’ll be able to output a file that shows the exact coordinates of every component placed on the board. This allows the assembly shop to fully automate the soldering of every component on your PCB.
Now it’s time to evaluate the prototype of the electronics. Keep in mind that your first prototype will rarely work perfectly. You will most likely go through several iterations before you finalise the design. This is when you will identify, debug and fix any issues with your prototype.
Evaluation and testing are usually done in parallel with programming the microcontroller. Before you begin programming though you’ll want to at least do some basic testing to ensure the board doesn’t have major issues.
Nearly all modern electronic products include a microchip called a Microcontroller Unit (MCU) that acts as the “brains” for the product. A microcontroller is very similar to a microprocessor found in a computer or smartphone. A microprocessor excels at moving large amounts of data quickly, while a microcontroller excels at interfacing and controlling devices like switches, sensors,displays, motors, etc. A microcontroller is pretty much a simplified microprocessor.The microcontroller needs to be programmed to perform the desired functionality. Microcontrollers are almost always programmed in the commonly used computer language called ‘C’.
Certification is necessary for all electronic products. Electronic products emit some amount of electromagnetic radiation (i.e. radio waves) the point of certification is to make sure that products don’t interfere with wireless communication.There are two categories of certification. Which type is required for your product depends on whether your product features wireless communication capabilities such as Bluetooth, WiFi, ZigBee, or other wireless protocols.
Products with wireless communication functionality are categorised as intentional radiators. Products that don’t intentionally emit radio waves are classified as non-intentional radiators. Intentional radiator certification will cost you roughly 10 times as much as non-intentional radiator certification.Consider initially using electronic modules for any of your product’s wireless functions.This allows you to get by with only non-intentional radiator certification, which will save you at thousands of pounds.
CE (Conformité Européene) CE certification is needed for the majority of electronic products sold in the European Union (EU). RoHS certification ensures that a product is lead-free. RoHS certification is required for electrical products sold in the European Union (EU) or the state of California. Since California’s economy is so significant, the majority of products sold in the U.S. are RoHS certified.
Lithium Battery Certifications (UL1642, IEC61233, and UN38.3) Rechargeable lithium-ion/polymer batteries have some serious safety concerns. If short-circuited or overcharged they can even burst into flames.Do you remember the double recall on the Samsung Galaxy Note 7 because of this issue? Or the stories about various hover-boards bursting into flames? Because of these safety concerns rechargeable lithium batteries must be certified. For most products I recommend initially using off-the-shelf batteries that already have these certifications. However, this will limit your choices and most lithium batteries have not been certified.This is primarily due to the fact that most hardware companies choose to have a battery custom designed to take advantage of all of the space available in a product. For this reason most battery manufacturers don’t bother with getting their off-the-shelf batteries certified.
Now we’ll cover the development and prototyping of any custom plastic pieces. For most products this includes at least the enclosure that holds everything together. Development of custom shaped plastic or metal pieces will require a 3D modelling expert, or better yet an industrial designer.
If appearance and ergonomics are critical for your product, then you’ll want to hire an industrial designer. For example, industrial designers are the engineers who make portable devices like an iPhone look so cool and sleek. If appearance isn’t critical for your product then you can probably get by with hiring a 3D modeller, and they are usually significantly cheaper than an industrial designer.
Once your industrial or 3D modelling designer has completed the 3D model you can then turn it into physical prototypes. The 3D model can also be used for marketing purposes, especially before you have functional prototypes available.
The biggest risk when it comes to developing the 3D model for your enclosure is that you end up with a design that can be prototyped but not manufactured in volume. Ultimately, your enclosure will be produced by a method called high-pressure injection moulding (see step 4 below for more details).
Developing a part for production using injection moulding can be quite complex with many rules to follow. On the other hand, just about anything can be prototyped via 3D printing.So be sure to only hire someone that fully understands all of the complexities and design requirements for injection moulding.
Plastic prototypes are built using either an additive process (most common) or a subtractive process. An additive process, like 3D printing, creates the prototype by stacking up thin layers of plastic to create the final product. Additive processes are by far the most common because of their ability to create just about anything you can imagine.
A subtractive process, like CNC machining, instead takes a block of solid production plastic and carves out the final product.The advantage of subtractive processes is that you get to use a plastic resin that exactly matches the final production plastic you’ll use. This is important for some products, however for most products this isn’t essential.
With additive processes, a special prototyping resin is used, and it may have a different feel than the production plastic. Resins used in additive processes have improved significantly but they still don’t match the production plastics used in injection moulding. I mentioned this already, but Design for Manufacture deserves to be highlighted again. Be warned that prototyping processes (additive and subtractive) are completely different than the technology used for production (injection moulding). You must avoid creating prototypes (especially with additive prototyping) that are impossible to manufacture. In the beginning you don’t necessarily need to make the prototype follow all of the rules for injection moulding, but you need to keep them in mind so your design can be more easily transitioned to injection moulding. You may also consider purchasing your own 3D printer, especially if you think you will need several iterations to get your product right. 3D printers can be purchased now for only a few hundred dollars allowing you to create as many prototype versions as desired.The real advantage of having your own 3D printer is it allows you to iterate your prototype almost immediately, thus reducing your time to market.
Now it’s time to evaluate the enclosure prototypes and change the 3D model as necessary. It will almost always take several prototype iterations to get the enclosure design just right. Although 3D computer models allow you to visualise the enclosure, nothing compares to holding a real prototype in your hand. There will almost certainly be both functional and cosmetic changes you’ll want to make once you have your first real prototype. Plan on needing multiple prototype versions to get everything right. Developing the plastic for your new product isn’t necessarily easy or cheap, especially if aesthetics is critical for your product. However, the real complications and costs arise when you transition from the prototype stage to full production.
Although the electronics are probably the most complex and expensive part of your product to develop, the plastic will be the most expensive to manufacture. Setting up production of your plastic parts using injection moulding is extremely expensive. Most plastic products sold today are made using a really old manufacturing technique called injection moulding. It’s very important for you to have an understanding of this process.
You start with a steel mould, which is two pieces of steel held together using high pressure. The mould has a carved cavity in the shape of the desired product. Then, hot molten plastic is injected into the mold.
Injection moulding technology has one big advantage – it’s a cheap way to make millions of the same plastic pieces. Current injection moulding technology uses a giant screw to force plastic into a mould at high pressure, a process invented in 1946.
Compared to 3D printing, injection moulding is ancient! Injection moulds are extremely efficient at making lots of the same thing at a really low cost per unit. But the moulds themselves are shockingly expensive. A mould designed for making millions of a product can reach several thousand pounds! This high cost is mostly because the plastic is injected at such high pressure, which is extremely tough on a mould. To withstand these conditions moulds are made using hard metals. The more injections required, the harder the metal required, and the higher the cost. For example, you can use aluminium moulds to make several thousand units. Aluminium is soft so it degrades very quickly. However, because it’s softer it’s also easier to make into a mould, so the cost is lower. As the intended volume for the mould increases so does the required metal hardness and thus the cost. The lead time to produce a mould also increases with hard metals like steel. It takes the mould maker much longer to carve out (called machining) a steel mould, than a softer aluminium one.You can eventually increase your production speed by using multiple cavity moulds. They allow you to produce multiple copies of your part with a single injection of plastic. But don’t jump into multiple cavity moulds until you have worked through any modifications to your initial moulds. It is wise to run at least several thousand units before upgrading to multiple cavity moulds.
This article has given you a basic overview of the process of developing a new electronic hardware product, regardless of your technical level. This process includes selecting the best development strategy, and developing the electronics and enclosure for your product.