A Limited Run: Testing the Market Without Going Broke
|Written by Jack Lander
Originally Published by Inventors Digest
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Posted: August 26, 2011 @ 7:24 am
Licensing your invention is a lot easier if you can show that it’s selling. That means you have to produce a small quantity of your product. Nice idea – until you learn that a plastic injection mold costs $25,000.
Now what? Fortunately, there are options. You just have to know where to look.
Small-quantity manufacturing lies between rapid prototyping processes and volume production. To discover the processes in the low- to mid-quantity range, visit www.jobshop.com. Also search —job shop shows — on Google.com for contract manufacturers, there were about 1,000 references last time I looked.
Attend the shows in your area; talk with vendors. Always ask about the most practical quantity range for your project.
Also ask about the best process for quantities above that range and below it. This research will take some time. But it could save you thousands of dollars and dramatically reduce your losses if you decide to abandon your venture.
Tooling for small production runs has a lower cost than tooling for volume production. The catch is that as the tooling investment drops, the cost per unit increases. (This is true even if you use aluminum molds. You can machine aluminum much faster than you can steel and can reduce cost by as much as 75 percent.)
Suppose you only want 200 parts for market testing – a good strategy if you hope to license and pass the mold cost on to your licensee. You could have the part machined in a computer-driven machining center.
Your tooling in most cases consists of a special drill or reamer, and the program to run the machine. If you already have 3D computer-aided drawings, their digital information can be amended for the machining program at a cost of a couple hundred dollars or less.
Your part cost, however, might be $2.50 per unit, compared with maybe 30 cents for a molded part. Still, 200 pieces for a total of $700 for tooling and parts may prove a wise test investment. If your part is a stamped and formed sheet metal piece, the same principle is true.
Rather than invest several thousand dollars in a stamping and forming die-set, you can have the blank shape cut by either laser or abrasive water jet, and the bending done on a press brake.
Again, the digital information from your drawings will control the machining. A limited run of stamped parts will cost dollars, rather than pennies, just as they did for the plastic injection molded parts.
You may be tempted to produce limited runs offshore. The same mold that you’d make in the United States may cost half as much in China. However, that gap is beginning to close. The cost of the molded parts won’t be a proportionate bargain.
Add import tariffs, ocean transportation costs and the nightmare of quality control, and the savings may evaporate or turn negative.
If you intend to produce and market your invention on your own, it usually makes sense to test the market before investing in the volume-production tooling. But price the product as though you had been making it with the volume tooling.
Will you lose money? Probably.
Thomas Edison sold his first light bulbs for far less than their cost to launch his system of power generation and lighting. Remember, your objective in the early stage is to prove that you have a market, not to make a profit.
About the Author
Jack Lander is known as the Inventor Mentor, having counseled many inventors over the years. A mechanical engineer by training, Jack has received ten patents on highly successful laparoscopic surgical instruments, computer chip testing devices and a bicycle transmission that is more efficient than the traditional derailleur. He has also written for Inventors' Digest magazine for much of the past two decades, and has served as the invention development and manufacturing expert for Entrepreneur.com, the Internet arm of Entrepreneur magazine. Jack is also a Past President of the United Inventors Association, a not-for-profit umbrella organization that helps inventor networking groups and inventors throughout North America.
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