How much does it cost to launch a physical product?

How much does it cost to launch a physical product?

1 (00:00:08):

Welcome to the Bring Your Product Ideas to Life podcast, practical advice and inspiration to help you create and sell your own physical products. Here is your host Vicki Weinberg.

Vicki (00:00:21):

Hi, thank you so much for listening. I am recording this a few weeks in advance, as I'm trying to sort of make sure I'm ahead of myself. So it early may, now is actually a Saturday. So you might hear the lawn mowers and children played in the gardens and other stuff like that. While I'm recording, I try and keep it as quiet as possible. But right now that's pretty hard. I'm having a sort of grab any moment I can take to come and talk to you and, and record it for this. So thank you for being here. I'm going to get straight into today's topic. So when I speak to people who are looking at creating a product or a question that comes up a lot is how much money do I need? And also sometimes where do I find that money in the first place is a really common question and it's a concern and I can completely get it because yes, you do need some kind of investment to launch a physical product.

Vicki (00:01:14):

Now, I can't sadly give you a short giving you an exact figure. I've always, this would be a very short podcast and it might be a very small amount and it might be a large amount. Umm, and the reason I can't give you the exact figure is there were so many variables. So it depends on the kind of products that you're looking for. You know, your exact specification way of looking to source it from, how many products you need type of packaging. There were just so many variables. So I cannot give you an exact figure. What, what do you know is what I'd love to be able to? But what I can do today is talk to you about what costs you can expect and how to find them out. So at least you don't end up with any nasty surprises and you have a really good idea of what you're looking at upfront.

Vicki (00:01:59):

And hopefully I'm going to talk about some things here that you've already fought about in terms of the costs you need to prepare four. And I may, I also talk about some things that you hadn't considered, and that will be really useful too, because when you are working out, whether your product's viable and wherever it can be profitable, having all of the information up front is going to be really useful. Just remember, you've heard me say this a lot of times before, but I still believe that it's a bit less scary spending this money that we are talking about today. If you know, you've got a product that will sell well. So if you have absolutely no idea, its quite a big gamble and I've talked about this. So a lot in previous episodes, but validate in your product idea is something I think you should absolutely do.

Vicki (00:02:42):

Perhaps even before you get to the, we'll definitely be fore. You get to this stage of working out what your product is and how much it's going to cost you to produce it and ship it and store it and market it. And all of

these things. So episode 10 with Abbey Teunis is a great one to listen to you. If you haven't already, there's also a really informative Blog post. If you prefer to raise it, I'll link to both of them in the show notes. And

actually speaking have show notes for a few people who have said to me about, Oh the show notes, depending on where you are, what platform you're listening on. If you have a look for something that says details or more information, you should be a whole load of text that goes with this episode where I give you a bit more information about what it is, what I'm talking about.

Vicki (00:03:24):

And right at the bottom, there were some useful links and anything I said, how are you will be linked from this episode will will be linked to there and you can get directly There. You can also go to VickiWeinberg.com/podcast. And I'm all the show notes for every Episode in one place over there too. Okay. So let's move on to the part you've perhaps been waiting for. So I'm going to talk to you about the cost. Do you need to consider when you're thinking about creating a product and how to find out what they'll be? Okay. So I'm going to start with the obvious one, which is a production and this will most likely be your biggest costs because wherever you are, a product is bespoke, wherever it is a variation or something already exists. And I'm like, my Bambi muslins into, for example, there will be a cost involved in producing it and then may also be a cost involved in designing it as well.

Vicki (00:04:12):

So my Muslin's were a variation on an existing product, but I did have to pay a designer for the patterns, you know, the designs that go on to them. And it depends on what your product is. It may need some degree of, of design work and it may be something completely new and original where you're going to need prototypes

building and that kind of thing. So the cost here will vary greatly. And it will also very, depending on, you know, the materials you use, the complexity involved, the country it's made in and how many you order. And as I said, if it's something completely new and groundbreaking and you might have a development and prototype cost as well.

Vicki (00:04:52):

So this has definitely going to be your biggest costs. Is it a lot to consider? And the best way to find out that cost is once you have a specification, which will talk about a future episodes at once you have a specification, you know exactly what your product is. You need to start reaching out to suppliers and asking for quotes. You can get an idea of what products might cost by looking on sourcing sites and other websites. But often the figure you see is for their off the shelf products and the minimum orders might be quite high in that it won't actually reflect what your pay, but it all means, look, it might give you an idea. The best way to get an accurate figure is to contact suppliers and ask them. And then again, coming back to the specification, you, you, you, it's going to be, to be as clear as you can on what your product is, you know what its kind of been what the exact specifications is done.

Vicki (00:05:43):

So there's an example unless you use My Bambi muslin. So if I have gone and said, I would like a quote for Bambi Muslins, but it hadn't known how thick I wanted them to be. So how many layers of Muslin I wanted if

I hadn't known the exact size that I wanted my own designs, printing the number of colors involved in the printing, what I wanted them a package in a box, all those things impact of the cost greatly. So if I had been looking for a class at a smaller, or if I wanted less collars in the designs or I had wanted different packaging that would have really impacted the cost. So the I'm a big believer of going and getting a crate for the exact product that you want it as close as you can. So rather than saying, or can you create me for a bamboo and quite a bit for cotton?

Vicki (00:06:25):

Can you quote me for a packaging in a bag and packaging it in a box? Obviously their might be one or two things that you like actually that is not such a big deal. Let's let's find out, but hopefully if you've done your validation and you've done your market research, you'll know exactly what product you're looking for. And I

think you need to wait until your, at that stage before you actually go out and contact suppliers and get quotes. 'cause, you're actually getting an accurate price for the product that you're looking to produce. We'll definitely talk about how to create a great product specification and have a Episode and how to find a great suppliers. So don't, you know, don't worry to much about that. Now I have spoken before about weather to source your products abroad or whatever the source in your own country.

Vicki (00:07:07):

I've got the detailed Blog post on that, which will be linked up in the show notes and find the thing to remember is even if the product you're looking to create, it is something you're planning to make yourself, or, you know, perhaps you got a friend or family member who's going to make an app for you and you think, well actually there won't be any costs. You will still need to factor in the cost of materials and the cost of the time taken. So don't forget about those. Okay. The next cost to think about is product samples. So I believe that even if you're sourcing a fairly simple product, you should definitely get to some samples from a at least two or three. So tight to say two or three suppliers is a good number.

Vicki (00:07:47):

So I'm talking about you are contacting suppliers and pliers your making a short list. You've got maybe two or three when you think actually, yeah, these are the people I could work with. They sounded like they can produce the products they want. This is the stage where I believe you need to be ordering samples, just so you get a feel for the quality where if they've understood the brief that you've got and you know, this isn't a free the costs again, really vary. So some suppliers would just charge you the shipping cost, but some were will charge you for producing the sample as well. So the more work they need to do on your products will really affect the price of the samples. So if, for example, some suppliers will send you a stock samples and they're genuinely a lot cheaper.

Vicki (00:08:29):

And I believe that actually you want to get a sample of your exact product for two reasons. One, because as I say, you then get an idea of whether they've make a brief is a really good way of assessing the, you know,

what a customer we'll see if the actual final product, the second reason is if you have a decent sample, you'll be able to use that for your product photography while your final products have been developed. And that'll save you a bit of time at down the road as well. So do you factor this cost in it? I mean, this isn't going to be a huge cost. I would say it it's going to be a few hundred pounds at most, for most products, not at all, but it is definitely something to think about.

Vicki (00:09:09):

Okay. So the third cost to consider is packaging. So packaging costs really ranged depending on what kinds of packaging you like and how much did you like to customize it? Say for example, a plain Brown box costs less than a printed box. And by printing, you know, you might have a praying Brown box with one or two colors printed on it, or you might have a full color box and that's the case for any kind of packaging that you have. You definitely can save some money in this area, but I would urge you not to do that at the expense of the April quality of your product. If your product is, is a premium product, I would suggest that your packaging needs to look premium two, by the way, a premium doesn't necessarily mean more exp PM doesn't necessarily mean really expensive, but it just, you know, I have to put some thought into the market.

Vicki (00:09:59):

So if I were selling a premium product, which I do, actually, I wouldn't just send them in a plain box. I would think about, you know, the overall customer experience and how the customer would want to receive the product and kind of think about the packaging and the product as a whole, for some products. I think the package, and it does matter a bit less, but I do remember you will need packaging, have some cotton. So I have had people say things Before like, well, I'm set it in pencil cases. I don't need package in, but they do still need something to protect them during shipping to wherever they've been stored. So they need to protect it while they're in the storage and then during the shipments to your customer. So in that case, perhaps just like a plane plastic bag, this is all that is needed perhaps or in a, in a little tag, but you do need some kind of packaging to protect your products.

Vicki (00:10:47):

As I say, that varies depending on the product is, but you will need something and there will be a cost of that. And have a little thing to mention, as you might find that the minimum order quantity is higher for your package and then it it's for your actual products. So it'll be sure to ask and check This. It might mean as an example, your ordering free a hundred products, but they say, actually you have to order 500 of the packages. And of course they would keep those extra 200 over for your next order, but it is a cost, you know, you have to be expected to pay for those all of those 500 when you place that first daughter. And so that, you know, things like this is just worth, keeping it in mind is because you know, it is going to add up.

Vicki (00:11:29):

And I just want to make sure that you're a factor in all of this in, and then the next thing to think about is any extras, say manufacturers might on add extra cost for things like plate fees for printing. So if you're printing

your own designs, whether that's, you know, printing on fabric or paper, or this is usually a one-off fee, you sometimes get charged. This when they produce a sample for you. Sometimes it gets reimbursed. If you place an order, sometimes it doesn't. These are all things to speak to the suppliers about. You might get charged extra for washing labels. If applicable, you might get charged extra for labeling products. So for example, you might want your barcode applied is a sticker, or you might want a barcode for a specific market place you're selling on.

Vicki (00:12:15):

For example, I sell it on Amazon. So I have Amazon barcodes at my supplier put on every box. So for me, I'm, it's not a big cost, but you know, its worth is we have known these things and there were a whole host of other sort of little things that I'm, that can start to add up. So say to be sure, you know, what these costs are up front.

It's just good to think for, you know, the exact specification of your product. As I said, Before and ask about these things because you, what you don't mind, is there any nasty surprises? You know, you've worked at all your finances, are you ready to place the order? And then the supplier says, Oh, but if you want washing labels, it's an extra 25 P per products or, Oh, you weren't there. So we're going to charge you that, you know, is make sure you ask upfront.

Vicki (00:12:55):

So when you're getting quotes, you get an absolutely everything included. And as I mentioned earlier, do you remember to consider any other costs involved in the creation of your product? So I mentioned before the pain and the design of the sort of to design for your product, umm, but you might also be looking at paying someone to work on your branding, your logo, your label, or your package in to say, just keep those costs in mind as well. Okay. So then the next cost to think about is shipping. So let's assume, you know, we've got to the stage where your product is, is produced. You know, you've got all of these production cost covers. We now need to think about getting your product from wherever it is being made to wherever it is going to be stored.

Vicki (00:13:38):

So wherever you're shipping domestically within your own country or internationally, unless you can actually go and collect the products yourself, you will be paying for some kind of shipping and obviously how far the product's traveling will impact them. So the method you choose and the shipping terms, you choose all impact of the cost. So if your shipping within your own country, let's just assume this is probably not a huge cost. And it's something you should hopefully be able to figure out using a delivery company website and that kind of thing and the cost. Hopefully we won't be so much if your shipping internationally, however, is a different matter. Umm, and depending on the quantity that your show that you're sending and how quick you need it to arrive all these things, I was really an impact the cost.

Vicki (00:14:27):

So I'm going to touch on this quite just briefly because there's quite a big topic, but there are different ways

you can ship your products. The most common are air rail and sea. So air is generally, the quickest and sometimes the most expensive while sea freight is generally the slowest and cheapest. However, if you're only sending a few small boxes, they might be little or no difference between using air or sea to send in your products. I tend to sell my products using Rail because I think it was a happy medium, but I've tried all of the shipping methods. And I can tell you that the cost really varied depending on the size of your shipment. And sometimes one is much cheaper than the other.

Vicki (00:15:09):

Sometimes there's not much difference. And the best, you know, advice I can give you is to ask her a few quotes or you can compare So right now. I have a shipping company that I'm really happy with a guy that I've been using for a while. But prior to that, whenever I was sending a shipment, I would always ask my supplier to get me at least one shipping quote. And then I will contact a few shipping companies as well that I would get multiple quotes and compare number of things to make sure that whoever you send your goods with to make sure that you've got insurance as well. So that if something happens during the transit, your cupboards that's that usually included within the quote, but you check and that's something obviously else to consider.

Vicki (00:15:51):

And I'm not going to touch on this in great detail, but there's something called Inco terms or international commerce terms, which referred to the agreement you make when you buy goods internationally. So these are the terms which set out which fees you pay and which fees are paid by the supplier. When you are shipping internationally, I'm going to link to a blog post in the show notes that talks about this and a bit more details because it was a bit of a tricky subject to a certain, it's not something that we want you to worry about. I'm a good shipping company. It will be able to, you know, help advise you on This which one do you choose? Honestly, it, it doesn't make her, it doesn't usually I can't see it your way. It doesn't usually make a massive difference, but it's just, you know, one of the things that I'd like you to be aware of and sort of take into account when you're, when you're looking to arrange your shipping.

Vicki (00:16:42):

And finally, if you are in porting your products, there will be fees involved as well. So you will need to pay duties and taxes on any good to import from another country and show your own country how much varies on the product, where it's manufactured and the country you are imported into. So the country you live in or the cost of your store and your product's in the country, that the goods were produced him. You can work this out for yourself on nine by me. You have there be a government website for the country that you're based in or help you work this out. But I'll be honest. It's really complicated. And I actually suggest asking Your the shipping company.

Vicki (00:17:22):

You chose to work with me for help here. You can also ask them to pay these for you when you get to

customs and then charge you for that, either in advance or retrospectively to save you, having to do this yourself, it shouldn't make much of a difference to the actual cost. But you know, you will need to know this class because even if you know how much your product costs create and you know how much it cost to ship, if you are not prepared to pay any taxes for that coming into the country, assuming your sourcing at broad, then you're going to get a surprise at the end, which I definitely don't want. So if you add all of these art, that is the total cost to get your product created and to your doorstep or two, a warehouse or wherever you're sent it yet.

Vicki (00:18:07):

And if you divide that number by the total number of products you all doing, you will have a cost price per item. However, I don't want to stop just yet because we, I do want you to remember that to work out of your product will be profitable. You also need to consider a few other things. I'm going to give you a really quick run through of now. So these are the things. So we've got the cost now for sort of producing and so producing your products and getting it sent wherever it needs to go. But I don't want you to think that, you know, that's where it all ends. So if you will need to think about marketplace fees. So this is so wherever you intend to sell your products, most platforms charge either a flat fee, a commission or base.

Vicki (00:18:51):

So if you know where you want to sell your products and I'm sure you've got a bit of an idea, you do need to look into what the costs are going to be. And I'm, you know, these are the various or some marketplaces such as Amazon where you, where they can store and ship your products for you. Obviously there is a cost for this, or you could just sell on the platform and store and ship your products yourself and that slightly cheaper. But you know, you definitely need to look into this. Even if you use your own website, you'll still have to pay a hosting fee, possibly a transactional fee for each payment, depending on how you take payments. So, you know, things to consider storage is another cost.

Vicki (00:19:31):

So unless you are going to be storing your products yourself and your home at your garage or your shared or wherever, you know, you need to pay for this fulfillment is something else. So wherever you have a fulfillment provider, wherever you're going to the post office a few times a week, wherever you're going to have a courier com and pick things up from your house, you need to work at what the cost will be to get your product to your customers. And again, this is going to vary depending on the size of your product and how quickly you need to get it to people and have, and where your sending it, obviously shipping internationally costs a lot more shipping, huge boxes, costs a lot more of something that fits in an envelope. That's a bit cheaper. So you do, you need to work out what your shipping costs will be.

Vicki (00:20:11):

Whether you are doing this to yourself or paying someone else to do it, it for you. And it will still need to think about marketing. So initially at least you might want to invest in some marketing. You might want to do some

giveaways, which you need to factor in. You might want to do some promotion or discounts. You know how to get your first couple of sales. Yeah. The fact that the same photography. So you might want to have your products professionally photographed. You can't have you ever do it yourself? I'll actually link in the show notes for a blog post. My most recent product photos. I actually did myself. I'm, I'm not going to say that they're like the best, but I took the, myself and my iPhone. I edited there in Canva and they looked good.

Vicki (00:20:52):

They were approved to be used on the market place. So I wanted to use them on it and they looked pretty good. So we definitely can do it yourself. And I will link to that blog post. But if you don't want to pay someone to do that professionally, that will be a cost. And then finally you need to think about, you know, any other support you might need. So things like writing, product descriptions, something that I can help you with setting up, listening to the market places, which I can also help you with. And of course you can, again, you can do all of these things yourself, but if you know, there is something where you are like, actually this feels to me with dread, this is not my area of expertise. And you think it might make your life easier and produce it better for us. So if you pay someone to help you with it, then Just, you know, factor that in now.

Vicki (00:21:35):

And there were plenty of people out there that can help. So I know that is a lot, and I know that there's a lot to think about and, and a lot to do, you know, we have kind of going through the process of creating a new product a bit here. It is as well, or be it and some quite big steps and I'm a member I'm here to help. Should you need it? So I know I've just given you a lot of information there about all of the different factors involved

in creating a product. And you know, it might seem a bit overwhelming that certainly isn't my intention, as I've said many times before, I absolutely believe you can do this. It's definitely doable.

Vicki (00:22:15):

Those steps where it meant to phase, you know, I just really want to give, how do you know how much will it cost us a question? I get asked a lot and I really just wanting to give you a really considered detailed answer. So you have all of the, all of the facts, but If having listened to that. You'd go in. And actually that is a lot two

things that might help you. The first is I have a free checklist, which is available in my website that talks to you through all of the stages, creating a product. So you might find that USEFUL just to download and looking at that. It gives you the more, you know, the full, okay, I've got an idea of right for you. So your product is on the shelf or the virtual shelf. Just having that there, perhaps we'll be of use it to you, even if it's just to have the whole thing laid down in front of you.

Vicki (00:22:59):

And I am also opening the doors for my online course shortly. So my course is called launch it. And it takes you through the entire process of sort of creating your product and getting it ready to launch. So it goes through absolutely everything in much more detail than I have talked about today, including how to specify your products, how and where to find a supplier. We talk about a shipping and the shipping terms, and then

all of the, all of the elements in a lot more detail. And obviously there are lots of tasks for me to go away and do as well. So that is kind of like me holding your hand through the, through the whole thing. So if you're interested in, in that, there'll be a link to that in the show notes, or you can send me an email Vicki@tinychipmunk.com.

Vicki (00:23:43):

And let me know, you want to go on the wait list when that opens up. The final thing that I just want to talk to you about today is what you're going to charge for your product. So now, you know what your product is the cost to produce, or, you know, if you don't know now, you know it at some point, you're going to go through the process and work out all the costs. And let us assume that you've done your validation. I really hope you've done your validation and you know, people will buy it. So to work out, if it will be profitable for you, you obviously need to work out what you will sell it for. And I suggest putting a price on it. And so working out what you sell it before Before working out at costs, which is why we wanted to mention it on this podcast.

Vicki (00:24:24):

And so you don't actually need to know all of the costs before you think about what your selling price will be. So why that might sound backwards or intuitive. I believe that if you know your ideal selling price, before you get the quote for actually produced it in your product, you can actually be a bit more objective. So you have, what I mean is here. I was, I don't want you to work out all of the costs and say, okay, this product is going to cost me 10 pounds of produce. Let's say, so I need to sell it for that. It's just a two 20 pounds just to say that I'm going to sell it to 20 pounds. So it's going to cost me 10 pounds to produce. Umm, but actually everyone

else's selling it for 11 pounds, say M and you're, you know, you're not gonna make any sales because you will just spice too high, but you priced it high because that is how much it's going to cost you to produce it.

Vicki (00:25:13):

I don't know if you see what I mean here, but I just feel like that doesn't quite work. So what it means is if you know, you're going to sell your product for, let's say you worked out that your product is going to sell it for 20 pounds and do you work out all of the costs? And when you add everything up, it's just not profitable. You can either do one of two things. You can tweak things. So you can say, okay, so as it stands, this product won't be profitable, but what will happen if I changed a packaging? What was happen if I shipped it in a different way? So it took longer to get here, but it costs me less money. What was happening if I, you know, rather than putting forward and a pack, I put a three in a pack.

Vicki (00:25:54):

How would the impact of the price? Hey, you know, there are lots of different things. You can look at it as a kind of see if you can make it stack up or you could just put your idea of a side to now, or you could just say, do you know what are right now for the quantity I need to produce? I just can't. And you know that the way the market is what the kind of money these products are selling for, actually this isn't going to be profitable and you can put the idea aside and perhaps move on to something else before actually spending any

money. So th so the main thing here is I just don't want you to be spending any money on something that, you know, potentially, why don't you want to see your money back? And I just mentioned this here, because I think it really makes sense for you to work out what you want, sell your product for before working out all of the cost sense to me that I mentioned it in this episode, as I say, it might seem a bit back to the front to you, and hopefully it makes some kind of sense.

Vicki (00:26:42):

And you can see I'm coming from, I say, thank you so much for taking the time to listen. What I would love to know is what are the things that concern you about launching a product? Let me know, send me an email. It's Vicki V I C K I at tiny chipmunk.com M let me know, you know, what are the things that are stopping you from

getting started, or perhaps you haven't got started and there is something that's, you know, it was a bit of a sticking point and or something that you don't know that is holding you back. Let me know. And I will perhaps Spears cover this in a future episode. So tahsnk for Listen today as always, please do share this episode. Please subscribe if you haven't already and do let me review. I would so appreciate that all.

Vicki (00:27:23):

Thank you so much. Take care. Bye.