The Biggest New Product Expense

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The first time developing a product, engineering looks like the biggest expense but it is not. Engineering and other non-recurring expenses are things you pay for one time and make you money on every unit you sell. Your big expense is going to be your first order. It is a new invention so selling price is constant.

Example:

Your first order is 1000 units

  1. Your $5K developed product cost $20/unit to make + $30K Startup  = $55K for 1st 1K of product
  2. Your $20K developed product cost $10/unit to make + $20K Startup = $50K for 1st 1K of product

(2) saves $5000.

If you get lucky and next order is 10K units

(2) saves $10/unit and $100,000 on your 10K order.

Plan for Success not failure.