New Product Development and Marketing Consulting
FIVE STAGES TO PRODUCE YOUR PRODUCT
By David Lieberstein
The Dream Product Guru
There are a myriad of details to manage from taking your product concept into production and on to the marketplace! I am sharing numerous ideas and considerations to support you on your path to successfully launch your new product and company. I hope you find this article helpful.
STAGE ONE:
Product Design
Concept: What does your product do for the consumer? How is it different from other products that may address a similar use? Have you market tested your idea to close friends and business associates to assess the interest and viability of your product? What is your retail price target?
Make sure your product is properly designed with full specifications. A factory is not able to give you a proper quotation unless you have full dimensions clearly shown on simple drawings for each component part of your product as well as overall finished product. If there are any special requirements for surface finish, colors, materials, packaging, etc, do your best to consider and specify all these details.
Do you need to file a provisional patent or full patent? Is your product an invention that has unique functions and/or design that may be protected with a patent? Do your own online research with the U.S. Patent Office or other online services to search other similar patents before spending too much time or money with attorneys. Once you feel satisfied that your invention is patentable, review options online to file the low cost provisional patent yourself (under $200) or find a patent attorney to do the work (usually $500 - $5,000, depending on how much work they need to do and if provisional or full patent filing).
STAGE TWO
Factory Quotations
Determine the best type of factory you need to produce your product. You may find a domestic source that is cost effective to keep better quality control and jobs local. However, most products are usually less expensive to produce overseas. You can research online with alibaba.com where many factories will list their services. There are many U.S. or Hong Kong based sourcing agencies that will do the work for you, properly ‘vetting’ the factory to be sure they are high quality, integrity and reliability.
It is important to be very careful prior to sending your specifications overseas to someone you don’t know to protect yourself from copycats. Even if you have a provisional patent, that does not guarantee that an unscrupulous person in a factory may decide that your invention is great and too tempting not to copy it. If possible, only send portions of your unique product to quote or don’t disclose the product’s final use. A good agency will do their best to only work with reputable factories and will charge a modest fee above the factory costs (usually 10% - 20%).
Minimum order requirements are usually stated by the factory. These are often negotiable. Ask for your lowest projected quantity based on your sales projections and available budget for initial inventory. If their quote is for too many units, try asking them to produce a lower quantity at a higher price per unit.
Terms are usually 50% deposit to start production and the balance prior to shipping from the factory. These can be negotiated a bit, but usually not until you have done business together a few times.
Do pricing feasibility test to see if your ‘landed’ costs with proper margins to wholesale and retail will be competitive and viable to your targeted customers. Do not proceed with investing into production unless the numbers make profitable sense
STAGE THREE
Preproduction samples
Once you have accepted a factory and their pricing/minimums, they will produce a pre-production sample. If there are molds that need to be made to produce your product, you will need to pay for these molds before a final pre-production sample can be produced. Many factories can create an initial prototype by hand prior to building the molds. The mold cost can range from $500 - $50,000 or more, depending on what you are producing, materials used (metal, plastic, ceramic, etc.) and the complexity of the mold. This is a usually a one- time charge.
Sample approvals – be sure you are satisfied with the final pre- production samples before you give written authority to move forward into production. The factory will usually charge you for the air freight to send samples for your approval. The actual samples are usually done at no charge unless they are more complex and the factory requests a prepaid sampling charge.
STAGE FOUR
Product Logistics
Payment terms must be kept on a timely basis to assure that your product is made in the time the factory agreed upon. Production time is usually 6 – 8 weeks, once you have given written approvals to move forward on production AND they have received your payments for the deposits.
Contract with a Freight Forwarder and Customs Broker to arrange all the details for shipping, documentation and customs clearing. If you are using a sourcing agency, they will be able to arrange these details for you as well.
Once production is completed, you will most likely need to pay the factory the balance due for production. If overseas, these payments are arranged through your bank using a telex transfer of funds.
STAGE FIVE
Shipping and Warehouse logistics
Shipping time for China and far east regions is generally 2 -3 weeks to the west coast. Additional time needs to be factored in for unloading the container and transporting the goods to your warehouse location.
Arrange for inland shipping from the port of entry (or domestic factory) to your warehouse location.
Choose a warehouse facility. Will you lease your own warehouse space, use your home initially or contract with a ‘third party logistics’ company to store and ship your products? These are important decisions based on how many items you are producing, how much space will be required to store your initial production and budgets. An outside logistics company is often the best option to minimize fixed costs for warehousing and shipping costs to get products to your customers.
WORDS OF WISDOM
Do your best to minimize your investment for the initial production run to maximize the best use of your working capital.
Pre sell your product to key accounts as soon as you have approved your pre-production samples for production.
Have your website finished and operational at least 30 days before your product arrives to your warehouse.
Get all your administrative logistics set up to run your business from day one so there is no lag time once the products arrive at your warehouse.
Hire an experienced consultant to help you manage the myriad of details involved in production, package design, logistics, marketing and business planning to successfully launch your ‘Dream Product’.
Please review my website at www.dreamproductguru.com to learn more about my background in the housewares, gift and consumer goods industries, selling over $100 Million in products over the years, and the consulting services available.
Best of luck in your new endeavor!
[Five Stages to Produce Your Product | David Lieberstein | LinkedIn] is good,have a look at it! https://www.linkedin.com/pulse/five-stages-produce-your-product-david-lieberstein?forceNoSplash=true
[Five Stages to Produce Your Product | David Lieberstein | LinkedIn] is good,have a look at it! https://www.linkedin.com/pulse/five-stages-produce-your-product-david-lieberstein?forceNoSplash=true
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