10 Hidden Costs To Scaling Up Your Hardware Product
Scaling up an electronic product is where reality really sets in.
Prototyping is fun and exciting, because you get something working and it feels like real progress.
But once you try to move from a handful of units to hundreds or thousands, new costs start popping up that most people never see coming.
These aren’t deal breakers, but they’re definitely things you want to plan for.
And in many cases, there are smart ways to keep these costs down if you know about them ahead of time.
And before you get overwhelmed, just remember, most scaling costs don’t have to come out of your own pocket.
They’re often best funded through pre-sales or crowdfunding campaigns.
So in this video, I’m going to walk you through ten of the biggest hidden costs that catch hardware entrepreneurs by surprise when they start scaling up.
#1 – Production Test Fixtures
Let’s start with one that surprises a lot of people. When you’re building prototypes, you can test each board by hand.
But once you move into real manufacturing, factories need fast, repeatable, automated ways to test every single unit. That’s where production test fixtures come in.
A test fixture is a custom jig built specifically for your board. It holds the board in place, makes quick connections using pogo pins, and runs automated software to verify that everything’s working properly.
These fixtures often cost thousands of dollars to design and build, and you’ll also need engineering time to develop the test procedures and software that go with them.
One way to keep this cost down is to start with a simpler, semi-manual fixture for your first production runs before investing in a fully automated setup.
Planning for testing early also helps avoid last-minute surprises.
There’s even a term for that, Design for Testability, or DFT, which basically means designing your product from the start so it can be tested efficiently in production.
#2 – Certification Costs at Scale
Now this next one blindsides a lot of first-time founders. Certifications are where many people get tripped up.
You can ship prototypes without them, but once you want to sell at scale, you’ll need approvals like FCC, CE, and possibly UL or IEC safety testing.
The tests themselves are expensive, but the real surprise comes if your design fails and has to be reworked and retested.
To keep costs down, use pre-certified components whenever possible, like a certified wireless module or an off-the-shelf AC wall adapter.
Another smart move is to get a design review early from someone familiar with compliance so you’re building certification readiness right into your design.
#3 – Injection Mold Tooling
Alright, moving on to one of the biggest upfront costs you’ll face, injection mold tooling. 3D printing and CNC machining are great for prototypes, but once you move to volume production, you’ll need injection molding.
And molds are expensive, often tens of thousands of dollars.
They usually need a few modifications after the first shots too, which adds even more time and cost.
There are ways to manage it, though. Early on, you can sometimes use 3D-printed molds or inserts made from high-temperature plastics or ceramics.
Once you’re closer to production, aluminum molds are a good middle ground, cheaper and easier to modify.
Then, once your design’s refined, you can invest in hardened steel molds for long-term use.
Another way to ease the cost is by working with a manufacturing partner who’s truly invested in your success, not just filling orders.
With my own product, my factory actually amortized the mold costs by charging me a little extra per unit until the mold was fully paid off.
That turned what would’ve been a big upfront expense into a manageable ongoing one.
#4 – Minimum Order Quantities
Next up is something that can quietly drain your cash flow, minimum order quantities.
Suppliers often require you to buy components or enclosures in minimum quantities, even if you don’t need that many yet.
That ties up cash and can leave you with a pile of extra inventory.
This is another area where good partnerships really help.
In my own case, my manufacturer believed in the product and actually lowered the MOQ and even financed my first order by giving me 90-day payment terms after shipping.
That basically meant they lent me the money for production.
But that kind of trust usually comes only after you’ve shown some traction, things like pre-sales or a successful crowdfunding campaign.
If you can prove demand, manufacturers are much more willing to negotiate on MOQs or even help with financing.
#5 – Packaging Design and Production
Now let’s talk about packaging, because this one’s easy to overlook. At scale, packaging becomes a much bigger deal.
It’s not just about protecting your product during shipping, it also needs to help sell your product, especially if you’re going into retail.
For online sales, packaging is a lot less critical. A simple, protective box works just fine since the selling happens online.
That’s usually the best way to keep costs down early on, keep it functional and simple.
Then, if you move into retail, you can invest in something that looks great on a shelf, where the packaging itself helps drive sales.
#6 – Redesigns and Manufacturing Optimization
Here’s one that almost everyone runs into, redesigns during manufacturing.
Even after you’ve got a working prototype, you’ll almost always face design tweaks once you start manufacturing.
Factories might suggest changes that make assembly faster, improve reliability, or reduce yield loss. It might be as simple as adjusting a screw boss or moving a connector for easier access.
These redesigns can be frustrating, but they usually save money long-term.
One way to minimize them is to involve your manufacturer early. Share your design before it’s final so they can spot any production issues ahead of time.
#7 – Quality Control and Reliability Testing
Now this one is a big deal. As your volumes increase, you can’t assume that if one unit works, they all will.
Components vary, mistakes happen, and small issues can multiply fast.
That’s why factories rely on quality control and reliability testing.
QC means pulling random units from each batch for inspection or even destructive testing. Reliability testing might include vibration, drop, or thermal cycling.
These processes definitely add cost, but they’re essential if you want to avoid large-scale failures.
One way to manage this early is to run your own simple reliability tests during development. Drop it, heat it up, expose it to humidity.
Doing that up front helps uncover problems long before you hit the production line.
#8 – Logistics and Shipping
Next comes logistics and shipping, and this one adds up faster than most people expect.
Getting your products built is only half the battle, now you’ve got to move them around the world.
Freight, customs, tariffs, warehousing, and last-mile delivery all add up quickly.
At small volumes, you can sometimes store and ship from home, but once you start growing, you’ll want to work with a third-party logistics provider.
Most of these providers charge based on the warehouse space your products take up and offer pick, pack, and ship services.
That keeps things flexible and saves you from having to rent your own warehouse.
#9 – Support Infrastructure
Now let’s move into something that people almost never budget for, support infrastructure.
Scaling up also means supporting more customers, and this is an area a lot of people forget about.
Support infrastructure includes warranty claims, returns, spare parts, and customer service. If you don’t plan for it, it can eat into your margins and your time fast.
It’s not just about having software or ticketing systems.
You’ll need processes for handling defective units, a budget for replacements, and even extra inventory set aside specifically for warranty support.
Having that in place makes a big difference between happy repeat customers and frustrated ones who never come back.
#10 – Customer Acquisition Costs
And finally, let’s end with the cost almost everyone forgets, customer acquisition.
Scaling production doesn’t matter if you don’t have a plan to sell.
Ads, influencers, trade shows, distribution deals, they all cost money.
The best way to control these costs is to start building your audience early, before you launch.
If you can grow an email list or build a following through content, that’ll massively reduce what you need to spend on paid marketing later.
But one way or another, getting customers is going to cost something, and it’s critical to plan for that when you’re budgeting for scale.
There you go, ten of the most common hidden costs when scaling an electronic product, and how to keep them from spiraling out of control.
If you’d like my help minimizing these costs and avoiding expensive mistakes, you can get it inside the Hardware Academy.
And if you found this video helpful, then watch this one next, it’s going to help you take your product one step closer to successful production.
