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3 Steps to Bring Your New Electronic Product to Market Follow these tips to turn your concept of a brilliant new gadget into profit.

By John Teel Edited by Dan Bova

Opinions expressed by Entrepreneur contributors are their own.

Develop a prototype, get it manufactured and start selling. Sounds simple enough, right?

Nothing is simple about bringing a new physical product to market. It's even more challenging for those bringing a complex product, such as a new electronic device, to market. But many entrepreneurs have the false illusion that they can take a product from concept to market in a short time -- perhaps even in a year. That's just not realistic for most products, even simple ones.

Related: 5 Tips to Get Your Product or Service Noticed

Bringing a new electronic product to market is costly. The majority of boot-strapped startups don't have the cash or risk-tolerance to develop a market-ready product in one step. Instead, it usually takes many small steps to get a complex product developed, manufactured and on the market. Here's how to do that.

1. Prove the concept.

The first stage of development is to create a proof-of-a-concept prototype. The goal of this stage is to create a functional prototype while keeping risk and cost as low as possible. For electronics, this usually means using either a development kit or electronic modules.

A development kit is a platform for creating an electronic prototype without the need to have custom printed circuit boards manufactured. Generally, a development kit is a microcontroller board which can be programmed to serve as the brains for your product.

Arduino is the most popular electronic development kit. Arduinos are fantastic for putting together a low-cost, functional proof-of-a-concept prototype.

Electronic modules, on the other hand, are designed to perform a specific sub-function. For example, modules may be used to perform functions such as WiFi, Bluetooth, GPS or video-capture among many others.

But you can't take a development kit-based product to market. The end-product will be too expensive and frequently too large to be a viable product. However, at this stage, you are merely proving that your product indeed works as planned.

Also be aware that most large investors will be hesitant to invest in a product that is only taken to the development-kit stage. From my experience, they usually expect the product to be bootstrapped to the next stage.

Related: The 5 Hidden Costs of Building a Mobile App

2. Prove it will sell.

The next stage of development is to create a prototype that can actually be sold. You will need to produce small numbers of your product for market testing and getting feedback.

Think you know exactly what consumers want? I can almost guarantee that you don't -- although hopefully your close. The only way to truly know what they want is with real-market feedback, where people have voted with their hard-earned money.

If your product has any advanced features such as video, WiFi, cellular or GPS (to name just a few), then at this stage, your prototype will likely be a combination of custom-designed electronics and electronic modules. Modules may be used to implement some, but not all, of the advanced functions for your product.

This type of hybrid prototype will be less expensive to manufacture than a development-kit based prototype, yet it won't be as costly to develop as a fully custom-circuit design.

At this stage, the goal is to just produce something that can be sold -- but not necessarily at a profit. If you can break even, that's great, but you may have to even sell at a loss. Just remember, at this stage market data, not profit, is your goal. Profit will come later.

The use of electronic modules at this stage is a great way to implement complex functions into your product without spending tens of thousands of dollars on development. Their use not only reduces development costs but can also save you significant certification costs.

For example, all electronic products must be certified by the Federal Communications Commission (FCC) to be sold in the U.S. This certification is required to ensure that the product doesn't cause radio interference or produce dangerous levels of electromagnetic radiation.

The cost of FCC certification is drastically higher if your product includes wireless features such as Bluetooth, WiFi or cellular. By using modules for wireless functions that have already been FCC certified, you can save thousands of dollars in certification costs.

Wireless functions are also complex and risky to develop, and the use of a module greatly reduces this complexity.

3. Now comes the profit.

Finally, it's time to focus on profit! Once your manufacturing volumes warrants it, you'll want to upgrade to a fully custom-circuit without the use of any modules. This will lower your per-unit cost and increase your profit margins.

This is also likely the stage at which you'll want to consider moving your manufacturing to Asia. Moving manufacturing offshore will also increase your profit margins. Many entrepreneurs want to rush directly to this stage -- but that's a mistake. You don't want to jump to this stage before your sales volume is high enough to justify the high upfront costs.

New entrepreneurs should always strive for minimize risk. By taking small steps through product development, you'll reduce your risk and increase your chance of success.

Related: What It's Like When You Finally See Your Idea-Turned-Product on Store Shelves

John Teel

Founder of Predictable Designs LLC

John Teel is president of  Predictable Designs a company which helps entrepreneurs bring new products to market. Teel was formerly a senior design engineer for Texas Instruments where he created electronic designs now used in millions of portable devices (including some from Apple). He is also a successful entrepreneur who developed his own product, had it manufactured in Asia, and sold in over 500 retail locations in three countries. Download his free cheat sheet for developing your new hardware product.

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