What would you pay to find out how much your product cost to build and manufacture?
Hello everyone,
Quick question
What would you pay to find out how much your product cost to build and manufacture?
0 is a perfectly good answer, just trying to get an idea.
This is a bit too vague of a question. If you tell me how much it would cost to manufacture, only that thtat number, I would say it has 0 value to me, because in any case I would have to look for the suppliers, manufacturers, assemblers. Therefore, you can come up with whatever fake number you want, and I won't be able to contest that.
If you tell me not only how much it would cost, but which suppliers are able to provide the parts I need with the requisites I need, etc. I would pay (depending on complexity) between 10k€ to 50k€.
Interesting answer.
You have a point, someone could theoretically give you a random number and you would be none the wiser, but what if someone could give you a reasonable estimate when you were validating your idea? I was thinking more along the lines of improving your business plan and figuring out how much money you need to raise or save.
It is very interesting that you would pay 10-50k for someone to find possible manufacturing partners. I know of a couple of manufacturers but also know of a company that helps you find manufacturers in case you are looking.
If someone could give a reasonable estimate of just a number? I would still distrust it. What does reasonable mean? If I want to have a ball park idea to raise money, I would just contact random suppliers, or check their list price and use that as a baseline. Prices, theoretically, can only go down when scaling production. 3D hubs has an online price calculator, for non-precision parts, you get an upper estimate on costs. If you are just validating an idea, I would start by it. That was the first thing I did, built a BOM, sum up, and it worked reasonably accurately.
With manufacturing there are many considerations, which start in the design itself. Injection molding is not the same than laser cutting, which is not the same than 3D printing. 5-Axis CNC is not the same than 3-axis CNC. PCB manufacturing and QC can be cheap, but as soon as you need assembly (not to mention custom code on uControllers), logistics can become a nightmare. If you are at the stage of raising money, it means you are going to scale up production, which means supply chain becomes an issue which can have catastrophic consequences (just look at the Jolla tablet fiasco).
That's why I distrust reasonable estimates. They can't get you far without everything that comes next. I can check the price of the components, can get an estimate for custom parts, and do the math of the volume discounts. How to optimize to make everything work requires experience and getting your hands dirty. I do believe that having someone in the team that knows about this stuff is incredibly valuable, and as an investor, it would be one of the first things to check. And the 10-50k estimates raises from there, that is what I would pay someone for 3-6 months of work, depending on experience required, etc.
To sum up, I would say someone willing to request the service just to have a ballpark idea to raise money, is way too immature to actually go to the raising process. This means that the company will need much more than just a number, it will need a full explanation on how to achieve the goal.
As a disclaimer that I think it is important at this point, I am working on high tech, business-to-researchers, not to consumers. We use a lot of custom components, including custom optics, and custom manufacturing tools, that we use ourselves to build the product. I've spent a lot of time trying to source a laser with our specifications, for example, mostly because as a new company, bigger players don't take you seriously, or only listen if you want to buy 50k parts, which is not our case (yet, at least). Talking to people on trade shows was the best, having local distributors who understand what you do and have a good network of suppliers was also crucial, at least as a startup, eventually we'll have our own network.
Thanks for the offer. We are based in The Netherlands, and also found companies that help you with manufacturing partners (and even assembly!), but if there's any resource you can vouch for that want to share with me, feel free to reach out
Thanks for your feedback, by reasonable i mean something that is not crazy, that is not too far off from what you should be quoted. Hardly anyone knows what processes and tooling costs they might encounter, they won't even know what to search for. They don't know what they don't know. Imagine not accounting for injection moulding tooling costs for a large component, their cost estimate could be 10k-50k off.
I agree that a technical person with a basic understanding of the manufacturing process could do this themselves if they knew where to look, but it might require a lot of research, and time is money. If you were a non-technical founder then it wouldn't make sense for them to learn how to select the correct electronic components, create a BOM, understand all the details of the manufacturing process, and estimate the costs they might incur, it would take months and months and they still might not have done it properly.
Theoretically, you could contact manufacturers yourself, if you knew where to find them, but as you said, the bigger players might not take you seriously, so it would be interesting to see if they would quote.
To be completely transparent, I was asking the "would you pay to find out how much your product cost to build and manufacture" question to get feedback on my value proposition, and as you may have seen through my profile, i have a project called Big Ideas that offers a service that estimates a product's build and manufacturing costs. It is aimed at non-technical founders or technical founders who don't have the experience. As you mentioned in your message, a person would need support all the way from the start to manufacturing, which is why i also offer an advice service, a freelancer managing service, and for those who really need a lot of in-depth technical help a temporary CTO/Tech founder service. I am still trying to validate if these services are needed, so i appreciate the time you have spent trying to help answer the question.
Is knowing your building and manufacturing costs useful at the business planning stage?
I would say yes
Would you pay for a reasonable estimate?
Maybe, maybe not, but what would investors think if your estimate was way off? What happens if you spend months developing a product that you could never manufacture because you didn't realise how much it cost? Validating early and accurately could save you a lot of time, money, and help you focus on only the important ideas.
If you are looking for a reputable company to help you with the manufacturing process, i would recommend https://www.dragoninnovation.com/
I know a few people who have been happy using them, i haven't used them myself, but i would certainly talk to them if i needed support.
Thanks for the link, I've bookmarked them!
To be honest, I didn't check your profile, so didn't realize you were already offering something in this space. I think manufacturing advice is very valuable. However, as you mention, if you are trying to build something and have 0 idea on how to do it, may be way better to find a technical co-founder, in pretty much the same way if you want to build a website and don't know how to code.
To come back to your questions:
Definitely yes.
Yes, but not just for a number. I would pay only if it includes a detailed list of manufacturers, processes, suppliers, assemblers, warehouses, etc. that can deal with my requirements.
You have certainly given me something to think about. I could potentially give a suggestion for a PCB manufacturer, and explain the process, create a BOM and find component suppliers. However, this is focused on the PCB side. I do have some ideas for the mechanical side of manufacturing, but i have less experience with mechanical development so I will need to look into that a little more, especially for products that will be made in the far east.
Thanks for all your comments!