Product development is an important activity for any startup or manufacturer, more so if their entire business revolves around the success of their product.
Given the importance of product development services for any enterprise and the expertise required for developing a new product, it is crucial to hire the right product development company or firm to ensure a successful outcome.
In this article, we list 4 key factors you should consider before hiring a physical product development company. This article is focused on firms that develop physical products like consumer electronics, mechanical products, medical devices, wearables and such.
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1) Do you need a full-service product development firm or only a few specific services?
Development of a physical product requires expertise in several areas like industrial design, mechanical engineering, electronics and more.
Depending on the type of product and your in-house product development team, you may only need a few specific engineering services or the complete range of design and development services.
There are specialized firms that offer one or more engineering development services as well as full-service product development firms that offer the entire range of services.
Since product development requires a lot of collaboration among the designers and engineers, it is preferable to hire a product development company that offers as many as possible, if not all the services you require under one roof.
2) What type of pricing model does the product development company offer?
Product development companies offer a few different pricing models. T&M (time & material) model and fixed price model are the 2 common ones. Some product development companies also offer shared equity or profit-sharing models for startups and inventors.
A fixed price model helps you accurately budget in the development costs and plan accordingly but it requires a well-defined scope and a objectively clear definition of what a successful outcome looks like.
A time and material pricing model allows more flexibility for projects that don’t have a well-defined scope and require experimentation, as in the case of new innovations by startups. This unpredictability is a challenge in accurately budgeting the product development costs.
A less common alternative that bring some predictability in the development costs for new innovations by startups is the equity-sharing model. Here some part of the development cost is fixed and paid during the project and the rest is paid as equity in the startup. The high failure rate of startups keeps most product development firms away from sharing equity in new startups.
3) Upto what stage does the product development firm assist?
Different firms help till different stages of the new product development process. A design studio helps only with the product design aspect, whereas some product development firms help you reach your first prototype.
End to end product development firms help with the entire process of developing an idea from a napkin sketch and taking it all the way to production. It is important to choose a product development firm that suits your needs.
If you are a large manufacturer with an in-house team of engineers, then only industrial design services might be sufficient for your needs, whereas if you are a new startup with minimal product development resources in-house, then an end-to-end product development firm would be a better fit to help you with the entire process from idea to production.
4) Does the product development firm have experience in your industry?
Products in each industry have their own set of best practices, regulations, constraints and knowledge base that takes years to master.
A product development company that has worked on similar products or within the same industry, will have the required expertise to do things right the first time around. Specialist firms have a knowledge base and a network they can leverage to design and develop your product.
It is important to ask about any past projects done by the development firm to understand if they have done any products in the same industry as yours. For example, if you are looking to develop a smart electronics device, it is preferable to work with a design and development firm that has experience in consumer electronics industry rather than a product development company that works only on soft-goods and textile products.
Though it is not strictly necessary that they have worked on an almost identical product in the past, but anything that requires the same skillset and expertise as your product would be sufficient.