Resources for entrepreneurs developing new electronic hardware products.

Lesson 4: The Strategic Way to Develop and Sell Your New Electronic Hardware Product

In this fourth lesson I’ll be discussing product development strategies, electrical certifications, and manufacturing your product.

Electronic product manufacturing

Let’s start by reviewing the different strategies for developing a new hardware product.

Development options

There are multiple ways for you to develop a new physical product and bring it to market. However, the strategy that is best for you depends on your specific experience, your product, your team, and your finances.

There isn’t a single development strategy that is best for everyone, so we’ll look at five different development options.

In many cases you may find that some combination of these options is best.

For example, you may wish to design the electronics yourself, hire a freelancer to do the software, and partner with a manufacturer for the enclosure.

Option #1 – Do the product design yourself

You’ll need to be experienced with electronics design, programming, 3D modeling, and manufacturing. In most cases, you may have one or two of these skills, but will likely need to outsource some of the other steps.

Option #2 – Find an engineer to become a co-founder

Bringing on co-founders can be a great option if you lack the necessary technical skills or lack the money needed to hire outside engineers.

But finding good co-founders can be very challenging. You will be tied to them for years, so make sure they are a good fit. Also, bringing on co-founders reduces your equity in the company.

Option #3 – Hire freelance engineers

Keep in mind that very few engineers will be knowledgeable in electronics circuit design, programming, 3D design, injection molding, and design for manufacturing (DFM) so you will likely need more than one engineer.

You will also need to manage the various engineers to make sure all of the pieces fit together properly to form your final product.

Option #4 – Hire a full design firm

The main advantage of hiring a full design firm is that all of the engineers work together and the firm will fully manage the project.

If you lack the skills necessary to manage various freelance engineers then hiring a full design firm may be a better option.

The big downside though is that hiring a design firm to develop your product is the most expensive route.

Option #5 – Partner with a manufacturer

If you can find a manufacturer already making something similar to your own product, they may be able to develop your product.

This can sometimes be one of the cheapest and fastest ways to get through development, especially if the manufacturer has already developed a somewhat similar product.

The downside is the manufacturer will likely want an exclusive manufacturing agreement.

Development process

The development process for most hardware products can be broken down into three parts: the electronics, the software, and the enclosure. We’ll look at each separately.

Electronics design

Designing the electronics can be broken down into four basic steps:

Step 1 – Select the critical components based on performance, cost, quality of tech support, and long-term availability.

Step 2 – Design the schematic circuit diagram which is a conceptual diagram that is similar to a blueprint for a house. The schematic circuit diagram shows exactly how all of the components, from microchips to resistors, connect together.

Step 3 – Once the schematic circuit is done it’s time to design the actual Printed Circuit Board (PCB). The PCB is the physical board that holds and connects all of the electronic components.

A PCB is made up of stacked layers for routing the electrical signals. The simplest PCB uses just two layers. More complicated designs need more layers to connect everything together.

Step 4 – Prototype, test, debug, and repeat until you get a final working prototype. When creating PCB prototypes, I recommend using a professional PCB prototype shop instead of trying to hand solder your own boards, otherwise it can make debugging more difficult.

Software development

Just about all modern electronic products include a microchip, called a microcontroller or microprocessor, that acts as the “brains” for the product.

The microcontroller or microprocessor needs to be programmed to perform the desired functionality. This program is embedded inside your product and is called firmware.

Many products will also require a custom mobile application or perhaps custom computer software.

In most cases, it’s best to have the same team develop your product’s firmware because it requires a deep understanding of the electronics design.

It’s more feasible to outsource the mobile app to other developers, but it’s ideal if they too are part of the same team. That being said, it requires a totally different skill set to develop a mobile app compared to low-level firmware.

Enclosure development

The first step in developing your product’s enclosure is the creation of a 3D computer model.

The 3D model can then be turned into a physical prototype, and eventually into a manufacturable version of your product’s enclosure.

This model can also be used for marketing purposes, especially before you have functional prototypes available. You should request a photorealistic version of the model for marketing.

For prototyping a few units of your enclosure you will likely use 3D printing technology. Some products may also create prototypes using CNC machining.

For producing small batches of your enclosure you will likely use a process called urethane casting. And eventually, for mass manufacturing, you will use high-pressure injection molding.

Certifications

Almost all electronic products sold must have various types of certification. The certifications required vary depending on the product and the country where the product will be sold.

Below are the most common certifications required in the USA, Canada, and European Union.

FCC (Federal Communications Commission) certification is necessary for all electronic products sold in the United States that oscillate above 9 kHz (which is most products). All electronic products emit some amount of electromagnetic radiation (i.e. radio waves) so the FCC wants to make sure that products don’t interfere with other wireless communication.

UL (Underwriters Laboratories) certification is necessary for any electrical products sold in the United States that plug directly into an AC electrical outlet. Fortunately, for most products there are ways to avoid the need for UL/CSA certification.

CE certification is needed for the majority of electronic products sold in the European Union (EU). It is similar to the FCC and UL certifications required in the United States.

RoHS certification ensures that the product is lead-free. RoHS certification is required for electrical products sold in the European Union (EU) and California.

IEC62133 certification is required for rechargeable lithium-ion batteries. Fortunately, you can typically purchase existing batteries that already have this certification.

Certification requirements can be quite complex, so be sure you consult with experts about the regulatory requirements for your specific product. Early product decisions can have a major impact on certification costs so be sure you understand the implications as soon as possible.

Manufacturing and Operations

Manufacturing and operations become a major part of your business once you start selling. You now have to manage all the logistics associated with the manufacturing, warehousing, and shipping of orders.

At some point you will probably have your product manufactured in China. You have to arrange transportation from the factory to a Chinese sea port, where it will be loaded onto a sea cargo ship.

You then need to arrange for the product to be trucked from the arrival port, say Los Angeles, to wherever you have paid for warehousing.

Once in your warehouse in the U.S., you have to take care of shipping it from the warehouse to your customers.

One of the biggest costs in bringing a new hardware product to market that so many entrepreneurs overlook, is the high cost of the high-pressure injection molds required to manufacture your product’s plastic enclosure.

These molds will cost at least a few thousand dollars each, and for higher production volumes they can easily cost over $10,000 per mold.

It gets worse, because most products will require at least two molds, with many products needing 4-8 individual molds.

The best way to minimize the cost of molds is to start simple by using molds intended for lower production volumes. Also be sure your 3D model is optimized for injection molding which can greatly reduce their cost.

Fortunately, by this stage in the process you should have some outside options for funding these molds. This is where the manufacturing financing I discussed in lesson two is ideal.

This can also be a good time for a crowdfunding campaign which can be used to pay for these molds and your first production orders.

In the final lesson, I’ll be sharing some very valuable thoughts, tips, and recommendations so be sure to watch your inbox.

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.

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