What it really costs to make an electronic product
The parts are only part of it. Every cost that goes into one unit, the one-time costs that catch first products out, how to get from cost to a retail price, and the number you actually need to raise.
The short answer
The cost of one unit is its custom parts, circuit boards, components, assembly and packaging, plus import duty and freight to get it to you. That total is the landed cost.
On top come one-time costs: molds, certification, test fixtures and samples. The cash a first run needs is the one-time costs plus the landed cost of every unit in the run. That's usually the number to plan and raise around.
A live example
A small battery-powered room sensor with a two-part plastic case, Bluetooth, a rechargeable battery and one circuit board. Change the run size, where it's made, and whether certification is included, and watch each cost group move.
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What goes into one unit
Custom parts
Housings, buttons, covers: anything made just for your product. At low volume they're often 3D printed or cast; at higher volume, molded. Their unit cost falls sharply with quantity once there's a mold, but the mold itself is a one-time cost.
Circuit boards
The bare board plus assembly: placing and soldering the parts. Small runs carry setup charges (stencils, machine setup, feeders), which is why boards cost far more each at 100 than at 5,000.
Components
Modules, batteries, sensors, connectors, buttons, LEDs. Distributor prices fall with volume, and the cheap parts add up: a screw is cents, but ten of them plus inserts, gaskets and labels are noticeable.
Assembly and test
Minutes per unit multiplied by labor rates, which differ a lot by country. Fewer screws and simpler snap-together designs cut this more than negotiating does.
Packaging
A printed box, an insert, a manual, a cable in the box. Often more per unit than people expect, and easy to leave out of a spreadsheet.
Duty and freight
If it's made overseas, import duty and shipping go on top of the factory price. Tariffs change often, so check the current rate for your product and destination.
The one-time costs
- Molds and tooling for every molded part, from a few thousand dollars each to far more for large or complex parts. What a mold costs.
- Certification. Electronics sold in the US need FCC testing (Part 15B for anything with a processor, plus 15C for radios). The EU needs CE marking. Lithium batteries need UN38.3 testing to ship. Each typically costs thousands of dollars, and pre-certified radio modules cut the scope considerably.
- Test fixtures so the factory can check every unit works.
- Samples and pilot runs before you approve production.
From cost to a retail price
The landed cost isn't what you can charge, because each sales channel takes a share before you see any money. Rough rules of thumb for retail price as a multiple of landed cost:
| Where you sell | Rule of thumb | Why |
|---|---|---|
| Crowdfunding | about 2.5× | Platform and payment fees take around 8%; backers usually pay shipping. |
| Your own online store | about 3× | Payment fees, plus picking, packing and shipping each order. |
| Amazon | about 3.5× | Referral fees of around 15% plus fulfillment per unit. |
| Stores (wholesale) | about 4.5× | Stores buy at roughly half the shelf price. |
Marketing and returns come on top. If the price you need is far above what buyers will pay, it's cheaper to change the design now than after tooling.
The number to raise: cash for the first run
One-time costs plus the landed cost of every unit in the first run, usually paid before much of it sells. It's also why a bigger first run isn't always better: each unit gets cheaper, but the total cash goes up.
Suppliers don't ask for it all on one day, though. Tooling is commonly half with the order and half when first samples are approved; production is often a 30% deposit and the balance before shipping; duty and freight are due when the goods arrive. Laid out week by week, with the prototype builds before them and any pre-orders coming in, those payments give a peak: the most cash you're out at any point. That peak, plus a margin for surprises, is the figure to raise. Pilotrun turns your build plan into that schedule.
Commonly forgotten
- certification, especially for radios and lithium batteries
- packaging, inserts and manuals
- assembly and test time, and the test fixture
- import duty and freight
- samples, pilot runs and design changes after the first parts
- the cable or charger in the box
Pilotrun suggests these from your parts list, so they're in the budget before a supplier or a customer finds them for you.