How much does it really cost to develop a product?

Well, that’s like asking how much does a car cost? Anywhere between 1,000 dollars to a 1,000,000 dollars and that’s quite a big range. 

But if we could just answer a few basic questions we can probably narrow down the answer to the development question as well as the car question. 

The first main question is – Why do you want to buy a car?

The 

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Different approach

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Well, that’s like asking how much does a car cost? Anywhere between 1,000 dollars to a 1,000,000 dollars and that’s quite a big range.  

Don’t worry, by the end of this read, we can answer this question to a pretty good extent. 

The way to approach this, is actually backwards. It’s not how much it costs but rather how much profit is gained from the project. 

Our expertise are in major fields, medical handheld or desktop devices and small disposables.  For each of these fields we will outline the project plan in terms of economics and business development.

Let’s get started 

First, assuming the development has been finished, how many units can be sold to the market and at what retail cost? Both these figures are not known but they do have a range. So we have a minimum and maximum for each of them. 

Cost of goods can also be assumed to be anywhere between the unit retail price divided by 5 to unit price divided by 2.5.   

So, from all these minimums and maximums we can come up with our assumed annual gross profit. 

Here’s the gig – the development costs in the vast majority of cases will be around the 1 year of sales as the ROI. Yes, that short. 

Test cases:

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So, what was the question? How much does the development cost? It should cost around about one year of gross profit. It might slightly more or slightly less but that’s the answer in what we do.  

If you can sell the amount you claim at the price you claim you got yourself a pretty good project for development.  

But truly said this actually can be answered under some assumptions 

Here’s a list of predefined assumption 

From the R&D perspective we are actually going to do just the “D”. Research means there might not be a solution or that it might take a very long time and a lot of resources.  Development means that to a reach your goal product you already have a doable technological solution or a combination of technologies 

You have a good idea of unit retail selling price and annual quantities you can sell

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It’s tricky to give exact numbers for medical device development costs because it depends so much on the specifics. But, I can offer a rough table with cost ranges based on complexity. Keep in mind these are US dollar estimates and can vary widely: