In the Edison Nation eight-stage evaluation process, one of the factors taken under consideration in Stage 5 is the cost of your product. Cost includes: research, development, testing, manufacturing and materials.
During this stage, the Edison Nation Review Team conducts extensive market research in order to determine that the cost to manufacture, ship and sell this product is relevant to the perceived value that a consumer would expect to pay for the item. In other words, we want to ensure the product will be profitable once it hits store shelves. Ideally, products should be able to be made inexpensively and quickly. Remember, the higher the profitability, the more likely your product would be licensed.
?Your product idea is cost-prohibitive??
While there are several reasons why you may see the phrase above on your Dashboard, one of the main concerns contributing to the cost of a product is tooling required to manufacture it. The Business Dictionary defines Tooling?as follows:
Heavy or non-portable power driven industrial device used for abrading, cutting, drilling, forming, grinding, nibbling, or shaping of a piece of metal or other material. Machine tools (such as lathes) are ‘machines that make machines.?
Having the right kind of tooling in place is extremely important for manufacturers. If the tools don?t work properly, products are not manufactured correctly.
Edison Nation doesn?t require our innovators to have full knowledge of tooling costs in order to submit an idea, but we did compile a list of 10 factors that influence the cost of an injection mold:
- Part size ? Large parts require large molds, resulting in greater material cost.
- Part design ? Intricate part designs require elaborate mold designs, which generally increase the tool cost. Simple part designs require less complexity in the mold design, lowering the cost of the tool.
- Material selection ? If the plastic used is volatile or corrosive, requires high mold temperatures, or contains abrasive materials such as mineral, glass or carbon fiber, the cost of the tool might increase. These factors could also impact the maintenance cost of the mold (a residual cost).
- Part tolerance strategy ? Parts with tight tolerances will require additional mold manufacturing steps, which increases both the manufacturing and tool maintenance costs (residual costs).
- Annual volume ? High-volume (think hours of production, not number of parts) projects need higher quality tools to provide reliable service, which increases the cost of the tool. A higher number of cavities is also associated with greater manufacturing costs.
- Cycle time ? To achieve fast machine cycles, a tool needs uniform cooling throughout the cavity impression (and from cavity to cavity in multi-cavity tools). This requires well-designed tooling and higher precision build, both of which increase the tool construction cost and potentially the maintenance cost.
- Gate location ? Proper gate location is critical to part quality, but tools that do not have gates at the side of the part require construction techniques that increase tool cost. Additionally, the use of hot manifold systems significantly increases the tool price but frequently lowers the part price and/or tool complexity.
- Mold cooling ? The mold functions like a heat exchanger, drawing heat from the molten plastic. Uniform cooling throughout the cavity impression will yield the highest quality part and the fastest cycle time. Different cooling strategies will impact the tooling manufacturing cost.
- Manufacturing country ? Cost and quality vary by country. Lower-cost tools usually have some challenges. Choose what makes sense based on your needs.
- Design/Build ? A well-designed mold has lower residual costs, is easier to set up and to start, has lower reject rates and a predictable and consistent cycle time, and will perform well beyond its required life expectancy.
When an idea is reviewed, the team evaluates the complexity of what is being proposed versus the potential tooling costs associated with manufacturing your product. We need to be able to justify to potential licensing partners that the product can be made to fit within their current margins.
Another variable you should consider when developing your idea is material. Some materials are more expensive than others. If a feature or the functionality of your idea is dependent on a specific type of material, a rare-earth magnet, for example, the overall costs will be higher because rare-earth magnets are expensive.
If your idea happens to be declined due to cost, you may want to evaluate the functionality of your product idea. Think of how many pieces need to be created to make your product whole and see if there are modifications you can make to that idea to potentially lower costs. Take a look at materials you are recommending and offer more cost-effective alternatives.
If your idea reaches Stage 7 and is selected for due diligence by a licensing partner, you may hear that they are ?sourcing? your product. This means that based on Edison Nation?s research and presentation, the partner has significant interest in your idea and is choosing to have their manufacturing partners review it to determine how much it will cost to make. This cost will affect the company?s profit margin and what the retail cost of the product will be.
When a partner is sourcing a product, many additional variables come into play:
- Their current manufacturing capabilities
- Their volume of sales (the more products they manufacture, the lower their overall cost)
- The type of product being considered
- The price range of their product line
- Ultimately the partner?s bottom line (what they can and can?t afford)
To learn more about how to make your idea irresistible to potential licensing partners, check out our Top 10 Reasons Ideas Are Not Selected By a Search Sponsor And a quick reminder, Edison Nation Insiders have the opportunity to go back, edit/update submissions that may have been declined in past searches and opt them into new searches for FREE.