What do you think? How much does it cost?
Many people send me a request to design a custom motherboard for their product. And I always try to make it clear from the very beginning. Prepare minimum of $100 000 USD.
I am not saying it will cost this price, but many people are wrong about the cost of PRODUCT development – a way wrong.
There is a big difference between Prototype and Product
Let’s make a very basic math together:
- 30000 EUR for HW design
Depends on many factors, but you need to calculate with at least 500 hours for Motherboard design. I charge 60EUR/h.
Calculation: 500h * 60EUR/h = 30000 EUR
- 18000 EUR for 10 boards
Be realistic. Normally, you may want to build 5 boards in the first batch and then another 5 in the second batch. If you have a good designer and a bit of luck, you can sell some of the first prototypes, but for a big mass production, you always need minimum two spins of the board. To manufacture PCB for one spin costs 3500 EUR, to assemble batch of five boards costs 3000 EUR. You will need to multiply it by two – for two board spins.
Component price for these boards is high – and if you buy it just for the 10 pieces, it doubles or triples. So, if your board will cost 200 EUR (in mass production), to build a prototype you need to calculate with Component price 500EUR per board. This includes also duty and delivery fees and heavily depends on CPU and chipset – there may be a $100+ difference in price between slowest and fastest CPU.
Calculation: 2* 3500 (two spins of PCB) + 2*3000(to assemble two batches of boards) + 10*500(for components) = 18000 EUR
- 25000 EUR for BIOS customization
For your board, you will need your BIOS. If your board is very similar to a reference board, then the BIOS development cost starts at 15000 EUR, but if your board is very different, the cost can easily rise to 35000 EUR or more.
Calculation: 1x BIOS development for 25000EUR
Lets make a sum: 30000 (Development) + 18000 (Production) + 25000 (BIOS) = 73000 EUR … and change it to USD (exchange rate 1.28) = 1.28 * 73000 = 93 440 USD
… and you still have not done any:
– HW verification test (peripheral test, memory test, voltages, waveforms, …)
– Board extensive testing (environmental chamber, long run tests, stability tests, …)
– Certification (EMC, ESD, EMI, …)
– Production test (Production procedure, breakout boards, Test tools, Documentation, … )
– User Documentation (Product brief, Manual, …)
You can save few thousands on PCB or Assembly or Components or somewhere else, but it will not dramatically change the total cost of development.
I hope you found this article useful. If you have any questions leave a comment or contact me.
Welldone Blog 
To enrich your excellent post, I would like to share an experience of mine, on prototypes and products.
My company develops here in Brazil, among others, test-sets for E1 and T1 lines. Since it was going to be a product that would be used on the field and seen by others, I wanted it to be very nice, resistent, and handy case.
So I asked a very good company in Brazil to do the mockup and develop the tools for the best case ever. I wanted the best.
The best comes together with price: it would cost over US$180,000 to have the mockup done together with the dies, and kind of plastic and rubber to be used and a lot of etcs in between. All this in a 10~14 month period.
At the end, I used an already developed case from a plastic injection company, did a nice flat panel touchpad and had my product ready.
Still, other stuff where needed to “finish” the product: cardboard boxes for the product, big cardboard boxes for shipping the cardboard product box, printing of the cardboard, manuals, CUSTOMER ASSISTANCE, 1-800 number, etc. and all of the previous things that Robert stated above on his post.
Besides the product itself, I spent a little over US$ 14,000 on these minor things.
So, prototype and product are light-years apart.
By the way, forgot to mention the most important part: you have to sell!!! That’s, by far, the most difficult part.
Have you imagined how many notebooks must be sold so a company can break even its developing costs?
LikeLike
I absolutely agree Luiz. I was speaking about a “Board Only” as a Product. A Real Consumer Product (with housing, packaging, multiple boards, ..) is much more expensive and difficult to develop.
LikeLike