Follow these 5 initial steps to greatly increase the chances that you develop and sell a successful, profitable product.
#1 – Competition Research
The very first thing you should do after having a brilliant idea for a new product is to research whether or not someone else has already developed, patented, or sold the same or very similar product.
I hate to break it to you, but it is pretty common for more than one person to have the same product idea. In most cases it is your execution on the idea that will separate you from others with the same idea.
The last thing you want to do is invest time and money into a developing a product that is already on the market, or worse – is patent protected. So be sure to thoroughly research your product idea.
The easiest place to start is by searching Amazon and any large retailers to see if they are selling any products similar to your own. This may seem obvious, but I’m commonly surprised by how many people skip this step because they assume their product idea is truly original.
Then, you can move to using Google’s patent search function. Play around with searching keywords and identifiers for your product.
Google Patents is much more user friendly than the USPTO website, where you can also search for existing patents.
The USPTO does provide various tutorials on how to conduct a patent search. The How to Conduct a Preliminary U.S. Patent Search: A Step by Step Strategy is a 38 minute video tutorial.
What if you find a similar patent or a similar product already available?
First of all, don’t panic. Finding an existing product that is similar to your own doesn’t necessarily mean you need to scrap your product idea.
Most patents are rather narrow meaning they only protect a very specific solution. So by changing your product solution slightly you can usually avoid any infringement issues.
Many new entrepreneurs falsely believe that competition is a bad thing.
In fact, competition is just the opposite. Competition is actually a good thing, when it’s in the right amount.
Competing with a massive company like Amazon or Apple, for example, is usually not a good idea. However, you do want have some competition.
Having some competition shows that there’s actually a market for your product. Competition is a form of product validation. It validates that people are already willing to pay to solve the problem that your product solves.
It’s usually better to be second to market then to be the very first. That way you can learn from a competitors mistakes, and more quickly iterate and improve your own design.
There is a saying that pioneers get arrows in their backs, so it’s better to be a settler than an early pioneer.
Look for a competitor that’s making money, but one that you don’t think is doing things optimally. It’s better to look for holes in an already proven market, than to pursue an unproven market.
Think your product is better than the competition? Then you’re ready to continue validating your product idea.
#2 – Talk to Potential Customers & Retailers
Just because someone else is selling a product similar to your own, doesn’t mean it’s a good, or more importantly profitable, idea. You need to validate your idea, and the best way to do that is to talk to potential customers for feedback.
There was a great example of getting customer feedback that was recently shared by a member of the Hardware Academy named Barry who is working on a hybrid fitness interval timer.
He describes following the advice of one the Hardware Academy experts who had suggested that Barry stand outside a local gym asking anyone who was leaving for some feedback on his fitness product idea.
Barry said he learned a lot from talking to gym members, “after they calmed down as some crazy guy walked up to them in a car park with a cardboard timer in his hand!”
“Something surprised me big-time after talking to around eight people face to face, and a couple on the phone. No one so far seems to care what it looks like, apart from they do like one of the options which can protect the screen.
“Everyone said it’s something they would buy,” and Barry also discovered another potential niche market, since the respondents described needing his type of product while on holiday or working out in a hotel.
He also learned more about what customers don’t like about existing timers that are on the market – they are too bulky and need to be plugged in.
Way to go, Barry!
When speaking with customers, avoid saying your are the inventor of the product, since that will make respondents think you are emotionally invested in the idea, which could skew their answers or feedback.
If you want people to be completely honest with you, just say you are considering investing or working with a team on this project. Let the respondents talk, and try to observe their reactions to the product.
Another way to validate your product idea is to reach out to retailers, distributors and sales reps that deal with products similar to yours. For example, go talk to the manager of a store that sells your type of product.
An important thing to remember is that no one person can predict if a product will sell. This is why large retailers will only place new products for sale in a few stores. They don’t know if a new product will actually sell, so they test it out first.
Nonetheless, retailers or sales reps still know a lot more than you do about products similar to your own. They likely have years or decades of experience to base their opinion on.
Don’t hesitate to talk in person with a store manager or store owner in your area. If the product you are developing is a toy, for example, share your product idea with toy store owners or managers, and ask for their feedback.
They should have valuable experience about what types of products do well in their store.
Independent sales reps that already work with products similar to your own can also provide feedback. LinkedIn, Google and The Manufacturers’ Agents National Association (MANA) are good places to start searching for sales reps.
Reach out to them and get their feedback on your product idea. In my experience sales reps will be happy to share their opinions with you.
#3 – Simplify Your Product Concept
An efficient way to validate your product is to build what is called a Minimum Viable Product (MVP).
This means that instead of developing the ideal product that you think people want, you should instead develop the most simple version possible that solves the core problem. This means eliminating initially any of your product’s features that are not absolutely necessary.
Eric Ries, author of The Lean Startup, calls this process a build, measure, learn loop. You want to build something as quickly and cheaply as possible, and get it on the market. Then, learn all that you can through customer feedback.
You can then choose how to reiterate your product, what features to add or delete for example, using the data you collected from the MVP. This will allow you to develop a product that’s closer to what the market really wants.
Here’s a real world example about product simplification from one of the members in the Hardware Academy. This member is a technical person who had already specified a detailed list of features he wanted for his product.
His core product was going to be fairly simple to develop, but he wanted to charge its battery using a wireless charger that would need to be custom developed in addition to his core product.
This meant he was developing not one, but two custom products. This added a tremendous amount of unnecessary complexity.
This entrepreneur understood a lot of the technical aspects of his product, but not being an engineer, he didn’t realize that his product’s charger added so much complexity and development cost.
The custom wireless charger was a very complicated design, with motors that would align the product properly while it was being charged. In general, mechanical parts are time-consuming to perfect and prone to breaking down.
This type of charger was going to triple the development costs, because it was so much more complex than the original product.
After presenting his product in the Hardware Academy, and getting feedback from me and other engineers and experts, he realized how crucial it was to eliminate the wireless charger.
By instead bundling an off-the-shelf charger with his product, he would eliminate the need to design a second product, and save tens of thousands of dollars on custom PCB’s, electrical certifications and production quality molds.
Simplification can have a massive impact on your bottom dollar and time to market.
#4 – Determine Your Cost of Goods Sold (COGS)
Calculating the Cost of Goods Sold (COGS) for your product as early as possible is critical. The COGS for your product is ultimately how much you pay for your product.
The COGS includes your product’s manufacturing cost plus other costs like packaging, shipping, warehousing, and import/export duties. You could also look at the COGS as your break-even sales price.
If you don’t know the COGS for your product, you won’t know if your product can ever make a profit. You never want to put time and money into a product that is too expensive to manufacture and sell for a profit.
Many entrepreneurs make the grave mistake of waiting until their product is fully developed and ready to manufacture before they calculate the manufacturing cost.
Here’s a quick summary of everything you need to include when calculating your own product’s Cost of Goods Sold (COGS):
- Printed Circuit Board (PCB) production
- Electronic components (microchips, sensors, connectors, etc.)
- Soldering all of the components on to the PCB
- Injection molded plastic parts (enclosure, etc.)
- Miscellaneous mechanical components
- Final product assembly
- Quality testing
- Manufacturing scrap (no manufacturing process is perfect)
- Customer returns
- Logistics and warehousing
- Import/export duties (taxes)
#5 – Build An Online Audience
Building an online audience is a slow, long-term process so you need to start as soon as possible. This way, by the time you are ready to launch your product you’ll have a list of people interested in buying it.
I recommend that you set up a website, and start collecting e-mail addresses as soon as you decide to pursue your product idea. Ideally, your web site will provide information related to your product category and allow you to collect e-mail addresses of people interested in that topic.
If you are developing a fitness product, for example, then consider writing a blog about fitness and start collecting e-mail addresses of people that are interested.
This means you’re going to have to start a blog and produce lots of high value content. Instead of talking exclusively about your product, talk about things related to your product’s market.
This online audience is also great for gathering feedback on your product. You can send visitors to an online survey about your product, for example. This will help you better understand what your customer’s want from your product.
Further down the road, having an engaged audience will be critical for crowdfunding campaigns and for selling your product.
Most entrepreneurs are very excited, optimistic, motivated people who instinctively want to jump right into developing the final, production version of their product.
But skipping these 5 essential steps will likely lead to you developing a product that won’t sell, or won’t sell at a profit, or is too complex and expensive for you to realistically develop and bring to market.
Follow these 5 initial steps to greatly increase the chances that you develop and sell a successful, profitable product.Finally, don't forget to download your free PDF: Ultimate Guide to Develop and Sell Your New Electronic Hardware Product. You will also receive my weekly newsletter where I share premium content not available on my blog.
Other content you may like:
- How Much to Charge for Your New Electronic Product
- How to Determine If Your New Hardware Product is Really a Good Idea
- Lesson 1: The Strategic Way to Develop and Sell Your New Electronic Hardware Product
- The Right Way to Bring a New Product to Market
- Why You Must Simplify Your New Product Idea to Succeed