You may find it tempting and surprisingly easy to generalize the electronic product development process. The endeavor begins with a functional and feasible electronic product design concept. Starting from that point, a small team comprised of industrial, electronics, hardware, and software engineers would take over the project to come up with a design for the enclosure, a functional circuit board, a complete set of connectivity features like Bluetooth and Wi-Fi, and a feature-rich interface to control the product.
Table of contents
Electronic product design costs for each of the development stages
There is much to be said about the process and cost estimation for developing an electronic product, from the preliminary concept phase to package design, which is the final step. The following is a short introduction to gain insight into the electronic product development stages necessary to complete the design process.
| Development stage | Estimated minimum cost | Estimated maximum cost |
| Preliminary Design | $1,000 | $5,000 |
| Schematic Design | $2,000 | $8,000 |
| PCB Layout | $2,000 | $9,500 |
| PCB Prototypes | $2,500 | $7,500 |
| Hardware/Firmware Integration | $7,500 | $50,000 |
| Mobile App | $7,500 | $50,000 |
| Testing/Debug | $3,000 | $9,500 |
| Enclosure Design | $3,500 | $15,000 |
| Package Development | $1,500 | $4,500 |
| Project Management | $3,500 | $10,500 |
| Total Cost | $34,000.00 | $169,500.00 |
Electronic products vary widely based on size, features, functions, and applications. Some devices cost less than $50,000 to develop, such as a simple flashlight or a keychain capable of playing one or two sounds, but others are not as inexpensive. App-controlled children’s toys, automatic espresso machines, and smart thermostats designed by expert electronics design services are all complex electronic products; each probably requires an investment totaling hundreds of thousands of dollars to develop. The prices in the table are more relevant to the former category of modest designs than the latter group of sophisticated devices.
RELATED: How to find an electronic design company for outsourcing new product engineering
A common misconception around electronic product development is that a single electronics engineer should be enough to manage the process from start to finish. If you are talking about the components and the circuitry alone, an electronics engineer can probably do the job. However, the product needs a hardware enclosure best designed by an industrial designer or a mechanical engineer specializing in the field. An electronic product with smartphone connectivity features also requires embedded software, so it takes at least a software engineer and an app developer to ensure everything works as intended.
Software and mobile app development stages can make a whopping $100,000 difference in total cost. At the lower end of the spectrum, they don’t usually involve a complex set of features or a premium app interface design. The app is likely simple, with no more than several commands like a power switch, increase/decrease power consumption, and notification options. Many simple electronic products have no interface at all.
Fixed price vs. hourly rate
Electronic product design has two payment structures: hourly pay and fixed price. With the former, your payment is indicated by the number of hours the design engineering team works on the project; time-tracking visibility is of the utmost importance. On the other hand, a fixed price is a more straightforward approach because the cost is determined at the beginning.
Product design firms’ hourly rates vary widely depending on experience, location, and access to any pre-existing intellectual property that might be used to help speed up development time. Some outsourced firms claim an unbelievably affordable rate of $20 – $25 per hour. Most design firms in the United States charge an hourly rate of at least $100 to more than $200.
The main reason behind such a massive gap in pricing can be explained by the expected turnover time. It makes sense for some firms to charge a low hourly rate because they know the development time would take thousands of work hours. A reputable firm with a professional team of experienced engineers can finish the task much quicker.
RELATED: What certifications are used for new electronic hardware products & PCB design services?
A fixed price is preferable if you and the firm have a detailed statement of work and project specifications. Remember that even a “fixed price” can change if you want to alter or modify the design during development. The best option is to use the hourly rate during the preliminary design phases, where the firm produces a bill of materials and a price quote. Then, you can switch to a fixed price once the project scope is clearly defined.
Step-by-step development process
A typical electronic product development project can be divided into multiple phases, as listed below.
- Preliminary concept – $1,000 to $5,000
More than just a rough sketch on a piece of paper, the preliminary design concept of an electronic product is pretty complex already. It includes not only the expected external appearance of the product but also BOM (bill of materials). Sometimes referred to as product structure, a bill of materials contains a comprehensive inventory of all the items required to build the desired product, including but not limited to raw materials, electrical components, assemblies or subassemblies, and additional parts such as fasteners. Engineers can make near-accurate calculations of the product’s development cost and estimate the complexity.
- Schematic design – $2,000 to $8,000
The BOM created during the first step is only a rough estimate to determine a ballpark cost figure. When the product design firm produces a schematic diagram, which works like an electronics blueprint, it can automatically generate another bill of materials using PCB design software. While the BOM is more detailed at this point, it only includes the electronic components.
- Printed Circuit Board (PCB) layout – $2,000 to $9,500
Using the same software as before, the PCB design firm creates a digital PCB layout and matches it with the schematic diagram. If something is wrong with the layout, such as a problem with a specific design rule, the automatic verification (by the software) will fail. The development can only move forward to the next phase when the layout follows all design rules and is verified in an automated process.
- PCB prototypes – $2,500 to $7,500
The early prototyping phase requires only 3 to 5 boards to ensure the PCB design works well. Chances are some of the first prototypes will fail to meet expectations. It may take several iterations before you arrive at the right configuration.
RELATED: Guide to new electronics prototyping for hardware startups & design companies
- Hardware and firmware integration – $7,500 to $50,000
A firmware embedded inside the PCB’s microcontroller (or microprocessor) must communicate with all the connected hardware components without issues. Think of the process as an early form of product testing, but the firmware is only low-level software that governs the functionality and limitations of the hardware. You may notice the wide gap between the minimum $7,500 mark and the maximum $50,000 price tag, but a massive cost variation depends almost entirely on firmware complexity. If the electronic product design firm you hire employs no electrical engineer in the team, it has to outsource the development.
- Mobiles app – $7,500 to $50,000
Most electronic products that offer smartphone connectivity come with Apple iOS and Android apps. You can use only one version to cut the app development cost to 50%. While the two apps might look the same and offer the same features, each is designed to work only with one operating system. Developing an app is expensive; in many cases, the app development alone costs more than the entire design process.
- Debug – $3,000 to $9,500
While the hardware and software integration process does include functionality tests, debugging is much more comprehensive as it explores the entirety of the product’s functions and features. The main purpose of debugging is to discover the unknowns; the product is exposed to various environments, such as extreme heat, freezing cold, excessive battery discharge, and electromagnetic interference.
- Enclosure design – $3,500 to $15,000
The first step to developing an enclosure is for the enclosure design experts to draw a 3D model using CAD software. For the purpose of early prototyping, it is good to have the model drawn in STL format for 3D printing. The cost of 3D modeling and printing is affected by product size, design complexity, and materials. You may want to use an affordable material (filament) for the first prototypes because you may still have to refine the design. If your product is supposed to have an all-plastic enclosure, a 3D printer might be the only tool you need for the entire process. CNC machining is the best method to produce a quick prototype with metal materials.
- Packaging design – $1,500 to $4,500
Plastic clamshells and retail boxes are the most common packaging types for electronic products. The process is almost the same as designing an enclosure, beginning with 3D modeling. Regardless of the kind of packaging design material you choose, the 3D design firm can help you create an attractive packaging design and connect with a custom manufacturer to produce the packaging of your choice. Remember to include an instruction manual and relevant documentation like safety warnings and warranty information in the package.
RELATED: 3D models of electronic enclosures by freelancer designers on Cad Crowd
Certifications and mass production
As a reminder, the rates above are only estimates and do not cover the cost of certifications and manufacturing. Most electronic products sold in the United States, Canada, and Europe are subject to rigorous certification procedures to verify their safety, efficiency, and environmental sustainability practices. Getting your electronic product certified by such recognized bodies as the Underwriters Laboratories (UL), Federal Communications Commission (FCC), and Canadian Standards Association (CSA) might cost around $15,000 (about $5,000 each). However, acquiring CE marking and RoHS compliance is more affordable.
As for mass production, the cost largely depends on the manufacturing partner and volume of production. Some manufacturering companies implement a large MOQ (minimum order of quantity) of around 10,000 units for the first production run. Suppose a single unit of your electronic product takes $5 to manufacture; the total production cost to cover the MOQ is $50,000. It sounds like an expensive idea, but higher volume means lower production costs per unit. If the budget is tight, look for a factory partner that has a less stringent MOQ.
Individual engineers and project management
Given the complexity of electronic product development, you must consider partnering with a design firm or hiring a team of engineers. Most design firms have their own project managers in charge of communicating with clients and ensuring that the development progresses according to schedule. A manager also oversees team collaboration. When separately hiring multiple engineers, consider bringing project management into the team as well.
RELATED: The best PCB design software for electrical engineering professionals in 2023
Summary
This article reviews the estimated cost of electronic product engineering services and covers electronic concept creation and packaging design. It provides preliminary electronic product design costs, schematic design, PCB layout, prototypes, hardware/firmware integration, mobile app development, testing/debugging, enclosure design, package development, and project management. Manufacturing certifications, mass production, and collaborating with electronic product design firms or engineer teams for effective project management are discussed.
How Cad Crowd can help
Cad Crowd offers freelance electronic product design services to efficiently bring your vision to life. Our experienced electronic prototyping and design services provide knowledge across various stages, ensuring optimal electronic product design and development. Reach out to Cad Crowd for a free quote today!
