How to Price your HW Product (3/5)

Part 3 – Packaging & Shipping

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If you’re building a HW product, you’ve inevitably wondered:

  1. How much can I sell it for?
  2. How much money can I make?

In Part 3 of this series, Alan Povall from Product Nimbus explains why hardware startups shouldn’t worry about having packaging that’s as sexy as the iPhone.

How important are packaging and shipping?

Part 1 – The physical product (the stuff you hold in your hands)

Part 2 – Manufacturing and testing (making the stuff)

Part 3 – Packaging and Shipping (sending the stuff)

Part 4 – NREs (hidden costs that can sneak up on you)

Part 5 – Profit (everyone’s favourite!)

Packaging:

Packaging costs also vary widely depending on the quality of packing you want to wrap your shiny product in. It’s all the rage these days to go for ultra high quality packing design and materials to create a luxurious ‘unboxing’ experience. It’s my personal opinion that as a start up, your money should be spent on:

  1. Validating the living heck out of your market
  2. Creating a product experience so sublime that melts your customers brains into goo
  3. Finding the perfect manufacturing partner
  4. Promoting your product until you’re blue in the face

As you can tell from the above list, designing a 15 piece interlocking, shiny double bonded UV resistant cardboard portmanteau is not on the list. I’m not saying shouldn’t package your product beautifully (if you can do it for the right price), but I think you need to think very carefully about where your money goes. High end packaging can be anywhere from $5 – $20 per unit. Basic but respectable packing can start at $0.30 – 1.00 per unit.

Shipping:

Shipping costs are another fun variable, which change considerably based on where you are shipping from, your manufacturer’s MoQ and how Just-In-Time your sales model is. In most cases it’s not feasible to use air freight (unless your volumes are still relatively low), which means you’re stuck with a combination of sea and land transport. It’s an aspect that’s often overlooked with the Asian manufacturers, as they have large MoQs (up to 3,000 – 5,000), which need to be shipped to USA / Europe in most cases (not to mention port clearance fees), weeks if not months ahead of when you think you’ll actually need the stock.

If you know the weight, dimensions and MoQ your product to be made, you can phone around and get some shipping / clearance fee estimates from shipping companies.


Alan Povall is the Founder of Product Nimbus, which provides business resources for hardware tech start ups. Alan’s been involved with heavily in product development for over 7 years as part of an international HW design consultancy. He now works with aspiring entrepreneurs, start ups and even the odd charity to get their product ideas off paper and into the wild.

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