Product Cost Estimation Guide

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For hardware startups, accurately estimating the cost to manufacture a product and get it to market is essential. It not only determines the amount of capital required to produce the item but will factor into the ultimate end-user price. It can factor into how you market the product and what kind of margins you are able to take.

Inertia’s new Product Cost Estimation Guide is designed to help you do exactly that. It will help any hardware startup estimate the cost of their product with an easy to use, step by step checklist and calculator.

The Four Essential Components to Estimating Product Cost

Failing to properly cost out products is one of the five key mistakes that hardware startups make when bringing their product to market, according to Forbes. With so many variables to account for, product cost estimation can be a tricky affair. Fortunately, we’ve made it easier. The tool is sophisticated yet intuitive, allowing you to easily break down all the essential individual costs that need to be factored in. While this isn’t always an exact science depending on market conditions, this can give you great indication of where to take your supply chain. The Product Cost Estimation Guide allows you to list projected costs in the following four sequential categories:

Parts and Materials Cost

The first step allows you to input and estimate the various parts’ costs, whether they’re purchased or fabricated. Once all the information is entered it will help you create your bill of materials. This section takes into account such factors as:

  • Plastic part costs
  • Plastic tooling costs
  • Metal part costs
  • Metal tooling costs
  • Material cost comparison
  • Electronics
  • Manufacturing and assembly costs

Packaging Cost

The next section helps you estimate the packaging costs for your product. Even if you don’t readily have these figures available, the tool will help you come to a figure by educating you on common packaging types, as well as factors that affect packaging costs. It accounts for such variables as:

  • Type of packaging such as box, blister, clamshell or plastic case
  • Factors affecting packaging costs such as the size of the package, materials, graphics and color choices
  • Internal package components including poly-bags, foam supports, cardboard supports and plastic inserts

Shipping Cost

Shipping costs can be effectively forecasted in this section. Its calculations take into account both inbound and outbound shipping types and will help you come up a prediction based on the factors you input.

Product Cost Summary

The final section provides a summary of the total estimated product costs, from manufacturing through the packaging and shipping processes. This final amount can be used as a baseline cost amount for bringing hardware to market and can be recalculated at any time with modified figures.

When your hardware startup is planning to introduce a new product, don’t get caught off guard by hidden costs. Inertia’s Product Cost Estimation Guide is a dynamic and effective tool that will help you accurately determine the cost of the manufacturing process.

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