Know-It-Alls

To Market, To Market

One of the services a product development company can provide you with is obtaining market information. This information may help determine whether there is a market for your idea, and if there is a market, these companies can define it for you. They may also help you expand your idea into markets you may not have considered. They can help develop effective packaging, estimate the demand for your product and give advice on how to price your product.

The financial advice they provide may include tips on financing your idea and help with finding a business partner or licensee. Legal assistance may include patent searches and patent filings, gaining necessary government or industry approvals (Food and Drug Administration, Underwriters Laboratories, Federal Communication Commission and so on) to ensure your product meets safety requirements.

Manufacturing assistance provided by these companies can include designing your product to manufacturing specifications, preparing your product for manufacturing, and referring you to manufacturing firms. This assistance works hand in hand with the prototype development process.

The product development firm will work toward building a prototype that can be affordably manufactured. To do this, it might want to know how many units you plan to make in your initial manufacturing run and what you want the retail price to be. Using this information, it will have a prototype built out of a material that simulates as closely as possible the eventual materials used for manufacturing. For example, a final product made out of polyethylene or polypropylene will have a prototype made of urethane.

One product development company is T-2 Design Corp. in Santa Monica, California. President Paul Berman, whose company has specialized in industrial design and prototyping for the past 13 years, explains how they work: "We evaluate and research the idea, including patent searching, before we move on to the essential stage of designing a prototype," Berman says. "The raw idea is styled and designed into a functioning prototype, including any new mechanisms or electronics to make it viable."

Now for the bad news: Hiring a product development company can be expensive. Berman charges $60 for an initial consultation, during which the product is discussed and future actions are identified. Reputable product development companies will give you an honest evaluation in a consultation and tell you if they think your idea has any merit.

Generally, the next step is a patent search. T-2 charges $325 for a manual patent search. This means an individual actually goes to the U.S. Patent and Trademark Office in Washington, DC, and hand-searches through the patent repository library. When the search results are in, T-2 contacts a patent attorney who will review the search results and provide a $50 written opinion on the patentability of the idea.

If you decide to have a product development company design and build your prototype, be aware that the cost will vary depending on your idea. T-2 charges $60 per hour. Berman estimates the cost of designing and building a prototype to be anywhere from $1,000 to $14,000, depending on the complexity of the product. For prototypes with simple electronics, the starting point is approximately $3,500. Sophisticated electronic prototypes usually start at around $7,000.

After you choke on their quote for performing all the services you require, sit down and think about how much it would cost you in time and money to do it yourself, and consider the expertise they have that you don't. You may find the company is worth its fee when you consider it will reduce potentially costly mistakes, get your idea to market more quickly and provide expertise you could not find elsewhere.

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This article was originally published in the December 1997 print edition of Entrepreneur with the headline: Know-It-Alls.

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