How to budget for a product launch
Launching a new product takes time and money, and often more of both than you might expect. If you're launching a product for the first time there is a lot you might be missing when calculating the cost and time it will take to actually get your product to market. Here are some helpful tips to help save you time and money. Form a budget that takes the whole business into account To design and build your product you'll likely have large part of your budget dedicated Non Recurring Engineering (NRE) costs. This is everything it takes to design your product, test it's functionality, and build the tooling it would take to make your product. There is a lot to this step but careful planning and realistic estimations can help keep your budget under control and give you a realistic expectation for how long it will take to launch your product. Certifications and testing is another area that is often overlooked that can add significant extra cost and delay your project if not accounted for early on. Whether it's FCC, CE, UL, or any other certification program, it's important to know the applicable certifications early on and plan for them early on. Failing a critical certification program can add huge costs and delays to a product and could potentially kill the entire project. Sales and Marketing are often considered but under planned and not allocated the appropriate resources. Whether you're making a consumer product or business application it is important to consider what the likely Cost Of Customer Acquisition (COCA) would be for your product category. Between Facebook Ads, SEO, content strategy, or a direct sales team it will likely cost a significant portion of your MSRP to gain each customer. If you’re product is looking to get into a retail space then be prepared for very unfavorable terms and the consequences of unsold inventory. There are of course general operating expenses and other factors that will go into your budget and should be taken into account. Develop an estimated monthly burn rate for how much it will cost to keep your doors open while the product isn’t launched yet. This will help with the calculus of how much delays to launch will cost and put the priority of speed to market into better perspective.Lastly, be real with yourself and stakeholders. Entrepreneurship takes a healthy optimism but recognize that unexpected costs will arise and some aspects will inevitably cost more than expected. This happened to even the most experienced organizations as budgets and timelines are often exceeded. The goal is the build the best budget and timeline you can and try to stick to it. As they say “measure twice and cut one” except in this case its “Plan twice and execute once”.