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This article sort of glosses over the actual cost of designing the hardware. You should be able to get 500 units made working through a factory. Though minimum

This article sort of glosses over the actual cost of designing the hardware. You should be able to get 500 units made working through a factory. Though minimum qty for parts can be as high as 5000, usually factories can find most components in smaller qty for 2-5x the price, especially since they already have relationships with suppliers. At $25-$35 bill of materials for something retailing at $250-$300 you're only looking at maybe $15k capital costs for the electronics and maybe another $15k for the molds (less if you can use one of the cheaper processes). $30k is pretty cheap from a capital expense if you're just talking about testing a market. The bigger cost is going to be all the engineering that goes into a product like this. It would be easy to spend $100k in billable hours to bring something as complicated as a webcam to market. You've got component selection and schematic work, board layout, industrial design work, firmware. If you're lucky you can slap together the equivalent of an arduino with an attached camera for initial prototypes but that'll only get you so far, and can still take weeks of development just to have a proof of concept. Hardware development is not for the faint of heart. , and if you don't already have expertise in the webcam world, there's a good chance your product isn't going to actually be very good.

murkt 6y ago
> Though minimum qty for parts can be as high as 5000 It can be as high as 100 000. No stock anywhere. > $30k is pretty cheap from a capital expense if you're just talking about testing a market. Yep. That's what I thought before contacting SoC vendors. > It would be easy to spend $100k in billable hours to bring something as complicated as a webcam to market. I'm not in the USA, engineering hours are much cheaper in my country.
- varjag 6y ago
  > It can be as high as 100 000. No stock anywhere. There is always a way to obtain engineering samples/devkits. That's how the products in these 100,000 runs get to be. > That's what I thought before contacting SoC vendors. You don't buy from SoC vendors directly unless you're an enormous operation. Farnell, Mouser, DigiKey, Elfa.
  - murkt 6y ago
    > There is always a way to obtain engineering samples/devkits. That's how the products in these 100,000 runs get to be. Of course there is. But what's the point for me to produce a prototype if I'll have to produce hundreds of thousands of units in production with no way to sell that much? > You don't buy from SoC vendors directly unless you're an enormous operation. Farnell, Mouser, DigiKey, Elfa. "Your search returned no results."
    - milesvp 6y ago
      There are certainly parts that are unobtainium, that's why you need to have a good relationship with someone who has good relationships with parts distributors. A very important part of component selection is to make sure that you can obtain the parts in the quantity necessary. My general rule, is if I can't source it from digikey, I probably can't make the product, but I tend to design products that do runs in the hundreds, maybe thousands of units, so I don't have the same access to components as someone who's doing 10s of thousands of production runs. That said, you may be surprised what your factory can get it's hands on. And if you don't have a factory, then that might be an important step earlier than you might think. Sadly, I have no experience on how to build a factory relationship, and I'd imagine it's especially hard to find a factory with low expected volume. Yet another thing that makes hardware more expensive than you might think...
m-ee 6y ago
$30k is extremely optimistic for tooling costs for someones first hardware project. Maybe if they found a good JDM in China to work with.
cjwebb 6y ago
Are there any good guides anywhere you'd recommend for hardware startups - and how to reduce this $30K upfront cost? That is a lot of money.
- rasz 6y ago
  Search for successful hardware kickstarter postmortems (is it still called post mortem if it succeeded?). I think Bunnie might have done one for novena.
- milesvp 6y ago
  The math I did was pretty basic. BOM*quantity + mold cost. Those are sort of the basic knobs you can fiddle with. Not all molds are equal. I was just talking with someone last week who was going to 3d print one of the housings for a component he's designing, since the quantities are low, but found a molding technique that's low quality but simple, and he said it was maybe an order of magnitude cheaper than anything I was familiar with, so learning about molding processes can allow you to design products with a cheaper upfront cost there. I think he said this mold he was looking at was like on the order of hundreds of dollars, instead of thousands of dollars that I typically expect. BOM reduction can be tricky. Lowering your BOM makes more sense the larger your production runs, but when selecting components I tend to sort by price, then find the cheapest component that satisfies my needs. Of course, a more expensive component may allow you to skip other related circuitry, giving a cheaper overall build, so diving into datasheets is important. Quantity is the other thing you have some control over, but lower quantity batches have higher per item costs. Setting up a pick and place for a single board takes the same amount of time as setting one up for a larger run. If your quantities are low enough eventually setup fees are likely to start being a bigger percentage. Quantity also effects BOM costs. You can easily pay 2x as much for a component at low volumes, so you may not actually save as much as you think you will. I agree with you that 30k isn't cheap. But if you look at things historically, we've finally reached a price point for hardware, that you don't need to be a big business to even think about having consumer quality electronics. Apple started with kits 40 years ago and took investor money pretty early if I recall my history correctly. Today I expect it to be easier to bootstrap a hardware company since there's more infrastructure around bootstrapping. I've seen successful products that won't do a production run until they have a certain amount of preorders. But hardware is just always going to be fundamentally more expensive than software

murkt 6y ago

> Though minimum qty for parts can be as high as 5000 It can be as high as 100 000. No stock anywhere. > $30k is pretty cheap from a capital expense if you're just talking about testing a market. Yep. That's what I thought before contacting SoC vendors. > It would be easy to spend $100k in billable hours to bring something as complicated as a webcam to market. I'm not in the USA, engineering hours are much cheaper in my country.

varjag 6y ago
> It can be as high as 100 000. No stock anywhere. There is always a way to obtain engineering samples/devkits. That's how the products in these 100,000 runs get to be. > That's what I thought before contacting SoC vendors. You don't buy from SoC vendors directly unless you're an enormous operation. Farnell, Mouser, DigiKey, Elfa.
- murkt 6y ago
  > There is always a way to obtain engineering samples/devkits. That's how the products in these 100,000 runs get to be. Of course there is. But what's the point for me to produce a prototype if I'll have to produce hundreds of thousands of units in production with no way to sell that much? > You don't buy from SoC vendors directly unless you're an enormous operation. Farnell, Mouser, DigiKey, Elfa. "Your search returned no results."
  - milesvp 6y ago
    There are certainly parts that are unobtainium, that's why you need to have a good relationship with someone who has good relationships with parts distributors. A very important part of component selection is to make sure that you can obtain the parts in the quantity necessary. My general rule, is if I can't source it from digikey, I probably can't make the product, but I tend to design products that do runs in the hundreds, maybe thousands of units, so I don't have the same access to components as someone who's doing 10s of thousands of production runs. That said, you may be surprised what your factory can get it's hands on. And if you don't have a factory, then that might be an important step earlier than you might think. Sadly, I have no experience on how to build a factory relationship, and I'd imagine it's especially hard to find a factory with low expected volume. Yet another thing that makes hardware more expensive than you might think...

m-ee 6y ago

$30k is extremely optimistic for tooling costs for someones first hardware project. Maybe if they found a good JDM in China to work with.

cjwebb 6y ago

Are there any good guides anywhere you'd recommend for hardware startups - and how to reduce this $30K upfront cost? That is a lot of money.

rasz 6y ago
Search for successful hardware kickstarter postmortems (is it still called post mortem if it succeeded?). I think Bunnie might have done one for novena.
milesvp 6y ago
The math I did was pretty basic. BOM*quantity + mold cost. Those are sort of the basic knobs you can fiddle with. Not all molds are equal. I was just talking with someone last week who was going to 3d print one of the housings for a component he's designing, since the quantities are low, but found a molding technique that's low quality but simple, and he said it was maybe an order of magnitude cheaper than anything I was familiar with, so learning about molding processes can allow you to design products with a cheaper upfront cost there. I think he said this mold he was looking at was like on the order of hundreds of dollars, instead of thousands of dollars that I typically expect. BOM reduction can be tricky. Lowering your BOM makes more sense the larger your production runs, but when selecting components I tend to sort by price, then find the cheapest component that satisfies my needs. Of course, a more expensive component may allow you to skip other related circuitry, giving a cheaper overall build, so diving into datasheets is important. Quantity is the other thing you have some control over, but lower quantity batches have higher per item costs. Setting up a pick and place for a single board takes the same amount of time as setting one up for a larger run. If your quantities are low enough eventually setup fees are likely to start being a bigger percentage. Quantity also effects BOM costs. You can easily pay 2x as much for a component at low volumes, so you may not actually save as much as you think you will. I agree with you that 30k isn't cheap. But if you look at things historically, we've finally reached a price point for hardware, that you don't need to be a big business to even think about having consumer quality electronics. Apple started with kits 40 years ago and took investor money pretty early if I recall my history correctly. Today I expect it to be easier to bootstrap a hardware company since there's more infrastructure around bootstrapping. I've seen successful products that won't do a production run until they have a certain amount of preorders. But hardware is just always going to be fundamentally more expensive than software