10 Costs of New Product Development (NPD) with Design Firms

10 Costs of New Product Development (NPD) with Design Firms

To stay relevant in the current technological market, businesses have to release new products more frequently than they used to. But consumers today won’t buy just anything. Each new product a company releases has to be innovative and bring something new to the technological climate.

Coming out with new products isn’t cheap, and because consumers are demanding high quality and inventive technology, companies must go the extra mile to ensure each product release is successful. One way to do this is to invest in a new product from the moment it’s conceptualized.

Inevitably, product creation comes with a cost. Before diving into the process, here are some costs of new product development to keep in mind so you can budget accordingly.


Spending the right amount of time in the brainstorming phase of a new product design can be crucial to the product’s success. If you spend too much time thinking through a new product, the design can veer away from the originally intended concept into something irrelevant in the market. If you spent too little time conceptualizing, you may end up with a product that too closely resembles one that already exists or is already patented.


The brainstorming phase can also be extremely helpful in eliminating potential design flaws before investing in a designer.

CAD Design

After you’ve narrowed down your initial product concept, you’ll want to hire a designer to help you bring it to life. The costs associated with your product design will vary, depending on the complexity of the product, as well as if you’re using an in-house designer or a freelancer.

These days, most 3D rendering services work with CAD (computer-aided design) programs that will allow them to create a 3D rendering of the product you’ve got in mind, including all of its moving parts and how they interact. This will give you a realistic idea of how your product will look, its functionality, and how customers will use the product.

Prototype Design

Depending on what the new product you’re developing is, it can be extremely helpful to hire a prototype design service before going through manufacturing. The prototyping phase can help to further eliminate problems that simply can’t be identified in the design phase, such as how a product will be held in a consumer’s hands and if any of its components are getting in the way or need to be moved around to ensure a comfortable grip.

These aspects can, of course, be discussed during the design phase of the project, but nothing compares to when you can actually hold an item and experience how it tangibly fits in your hands.

Obviously, some products are far too large for a prototype to be cost-effective, such as a piece of furniture, but prototyping certain aspects of the object can still be helpful. In the case of furniture, you can use items already in existence to get an idea of the size and dimensions of the couch or lamp you’re creating. This can also be a good time to explore different textiles or fabrics to go along with your design.


Engineering the components of your product can take many forms and the complexity of the product you’re creating will determine how intricate the engineering of the final product will be. The engineering services phase is will determine for certain if the planned materials for a product design will work cohesively.

If you’re designing a new cellphone, for example, the outer bezel must be capable of withstanding any heat produced by the battery or the processor. If it isn’t, it could cause the outer shell of the phone to melt or, in some cases, combust, resulting in massive product failure.


If your product contains electrical parts, you’ll need a different type of freelance engineering service to work those out than the one working on the external casing or other components included in the design. You’ll want to make sure you’re using engineers who specialize in each marketable feature of your product.

Testing and Certifying

The number of tests and certifications you’ll need for a new product design will depend entirely on the type of product you’re making.

Testing doesn’t have to be a highly technological or expensive event. It can be as simple as gathering a group of unbiased volunteers to test out your prototype and provide feedback before you move into the final production phase.

It’s up to you to ensure your product is properly certified before launching it onto the market. The governing bodies for certifications differ based on product categories. In the United States, for example, the FDA (Food and Drug Administration) must approve any new food product being sold, including dietary supplements and vitamins. The restrictions on each of these categories is vastly different and it’s up to you to research them and ensure your product meets them before it’s launched.

Product Packaging

Plain and simply, product packaging design can make or break a new product. You’ll want to ensure that when you’re in the design and prototyping phase of product creation, you also consider the design and function of the product’s packaging too.

It’s a known fact that consumers make their purchasing decisions in mere seconds and product packaging can be a highly influential factor in a consumer’s choice between two nearly identical products. Make sure your product packaging designer is familiar with market trends so you can weigh the options of your design choices. You’ll want a unique look, but don’t dash traditional packaging styles for certain products. In many cases, product packaging reflects consumer trends. If there is one style of packaging you’re seeing over and over, it’s probably for a reason.

Minimum Order Quantity

Minimum order quantity can often be overlooked when companies are budgeting for a new product. This may not be a problem if you’re manufacturing a low-cost product that is projected to be extremely profitable, but more often, new products are being sold to a highly specific target consumer with limited profitability. A smaller manufacturing run translates into a higher cost per unit. Just in case the product flops, you’ll want to be conservative in your initial product manufacturing projections, so you don’t end up with a warehouse full of unsellable merchandise. But this means you should budget for a higher initial manufacturing cost as a result.

Import and Export

This cost is twofold. You’ll have to consider import costs for any components of your product you’re having designed or produced in another country and you’ll also have to consider the export cost of your own product when it comes time to decide on pricing. If export costs are extremely high, this could affect your decision to sell in certain international markets and will affect the potential ROI of your product.


Depending on the breadth of the consumer base for your product, you will need to figure out how far your company will be willing to ship its product. If this is a breakout product for you, you may want to offer shipping only locally or nationally until your product builds some traction in the market. If you’re from a larger company, offering worldwide shipping can expand your market capability and reach customers from all over the globe.


You’ll also want to consider whether you will be offering any shipping promos to consumers for larger orders. Ultimately, the cost of shipping the product will impact the retail price for which it is sold. In some cases, a product is simply too expensive to ship, and this may be one reason it hasn’t made its way to market quite yet.

Marketing and Advertising

This final cost of product development is one that can often be forgotten, since it won’t come into play until you’re ready to start selling your new device, but it’s just as important as any of the other costs mentioned in this list. What good is a fantastic new product if nobody knows about it? You’ll want to invest in some good market research before launching, so you have a good idea of the scope of your consumer base and can determine how wide a net you should cast in your marketing efforts.

Many phases of new product development can be outsourced to reliable freelancers and Cad Crowd can help you with this. We can connect you with pre-vetted freelance designers and engineers to assist with bringing your new product to life. Send us some details and get a free estimate for your project today!