Product development

3 tips to define a realistic new product development budget for product-based businesses

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I'm Marie-Louise!

In my 20 years of working as a product & project manager, I’ve got to know some great tools and gained valuable experience to efficiently develop products. I love to share my knowledge and these tools with you.

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When preparing for the selection of new product ideas in the Fuzzy Idea phase, one thing you need to know is how big the investment into this new product development is going to be. I’ve 3 tips for you to define a realistic new product development budget for technology-oriented, tangible businesses.

Making money on a new product is one of the key parameters in the decision to start a new product development.

The required investment money you need, to realise your new product idea, is needed to calculate the profit and the pay back time.

As nothing is for free in life, there are many items which need to be taken into account when defining the project budget. The risk of forgetting lots of small items is definitely there in the busy lives of business owners, product & project managers :-).

If you recognise yourself in the above, you might want to take a peek at my Project Budget Planner.

I have 3 tips for you to help you define a realistic project budget.

 

1. Check predecessor products

When starting a new product development, most of the time you have predecessor products. These predecessors have a track record in costs, margin and sales.

You can use this existing information to estimate the required budget for your new product.

 

2. Organise a brainstorm meeting

If you are starting a complete new product innovation, you probably will need to do more research to estimate the investment costs. Gather around a white board with your colleagues of purchasing, product & project management, sales, marketing, finance, development and marcom. Probably with all the knowledge these disciplines have, you can make estimations and define actions to gather data on all the costs involved in defining, developing, manufacturing and launching new product.

Below some costs to give you an idea:

  • Product development costs
  • Manufacturer start-up costs
  • Customer focus groups for market research
  • Market research
  • A-samples
  • B-samples
  • C-samples
  • D-samples
  • Product design
  • Packaging design
  • Packaging shelf testing
  • Rapid proto typing
  • Product certification with notified bodies per region
  • Product certification samples per region
  • Plastic tooling
  • Metal tooling
  • User manual
  • Translation user manual
  • Installation manual
  • Translation installation manual
  • Quick reference guide
  • Translation quick reference guide
  • Marcom materials
  • Advertising
  • Translation marcom materials
  • Sales samples
  • Workshops
  • Product training sessions
  • DHL
  • Re-work
  • Unforeseen

 

3. Follow-up and adjust the budget

During the development of a new product, regularly check the estimated budget and adjust if needed. This gives you the opportunity to predict other cost increases in the budget and can take action if needed.

Hope this helps you in getting your budgets more realistic!

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SUPER ORGANISED, SPORTY, INTERIOR DESIGN LOVER, PASSIONATE ABOUT PRODUCT CREATION & AMAZING AT STRUCTURING ANYTHING. 

Hi, I'm Marie-Louise.

I teach business owners and entrepreneurs effective action steps for professionalizing their new product development process to take their business to the next level. 

Because I want to help you take the next step in professionalizing your business, I have created an online program focussed at creating a structured and efficient product development process in your business.

Learn more

free download

 Help yourself with this free download to kickstart your new product development and transform your new product idea into a thriving business!

Free download

There are important steps to take before starting the development of your new idea. One step is to write a clear and complete project briefing on your new idea.
Sign-up for the free template and receive free weekly tips on product-based business challenges.

Download here

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3 Ways to Professionalize Your Business

Is your business doing great and are you ready to scale?
My free guide on 3 ways to professionalize your new product development to take your business to the next level is the thing you need.

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If you encounter a challenge during your new product development, please do not hesitate to contact me. 

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