How much does it cost to develop a custom electronic product?

If you have an idea for a new electronic product, one of the first questions you will ask is how much it will cost to develop. The answer depends on what you are building, how complex the electronics are, how much software is required, and how far you need to take the product.

A simple connected device may cost tens of thousands to develop. A product involving custom electronics, embedded software, wireless connectivity, sensors, mechanical design and regulatory requirements can require a significantly larger budget.

The important thing is that you do not need to fund the whole development process from day one. Most electronic products are developed through a series of stages, each answering increasingly important questions about whether the product works, whether it can be manufactured, and whether it is commercially viable.

At Denotec we think about that in five stages: concept, proof of concept, prototype, MVP, production. This article covers what each one involves, what it can cost, and which factors have the biggest effect on the budget.

Typical costs, stage by stage

As a general guide, development budgets look something like this.

Development stage	Typical budget	Main objective
Concept and technical planning	£1,000 to £5,000+	Define the product and development approach
Proof of concept	£10,000 to £30,000+	Prove that the core technology works
Prototype	£20,000 to £60,000+	Build a functional custom product
MVP	£50,000 to £100,000+	Develop a product suitable for real-world testing
Production development	£100,000 to £200,000+	Prepare the product for manufacture

These figures are indicative rather than fixed prices. Some products can be developed for less; complex ones require considerably more.

1. Concept and technical planning

Before anyone designs a circuit board or writes firmware, it is worth understanding exactly what needs to be built. At this stage you may have an idea, a product brief, sketches or a description of what you want the product to do. The goal is to turn that into a realistic technical plan, which involves:

• defining the product requirements;
• identifying the main electronic components, and whether existing components or modules can be used;
• assessing technical risks;
• establishing connectivity and power requirements;
• identifying firmware and software requirements;
• considering how the product will eventually be manufactured;
• producing an initial development plan.

A technical assessment here prevents expensive mistakes later. An idea that appears to need a completely custom electronic design often turns out to be served by an existing wireless module, sensor or power management part. Equally, an assessment sometimes reveals that one requirement will take far more development than expected, which is much better to know before the budget is committed.

Typical cost: £1,000 to £5,000+. The cost depends on how much technical investigation is required. A straightforward product needs relatively little; a complex one can involve substantial research and engineering work.

2. Proof of concept

Once the technical approach is established, the next question is whether it actually works. A proof of concept exists to answer that, and nothing else.

The objective is not a finished product. A POC targets the most technically uncertain parts of the design, demonstrating for example that:

• a sensor can measure the required physical parameter;
• a wireless link works over the required distance;
• a motor can be controlled accurately enough;
• a battery can supply enough power for the duty cycle;
• an algorithm can run on the selected processor;
• several components can communicate correctly;
• a particular form of user interaction works;
• data can be collected and transmitted reliably.

A POC will often use development boards, off-the-shelf modules, evaluation boards and temporary wiring rather than a custom PCB. That reduces cost substantially while still letting the important risks be investigated.

Typical cost: £10,000 to £30,000+. A simple POC can cost less. More complex systems cost considerably more, particularly where they span several engineering disciplines or need custom mechanical hardware.

How polished the POC looks does not matter. Whether it answers the questions that would otherwise surface later does.

3. Prototype development

With the core technology proven, the next step is usually a functional prototype, the point at which the product starts to look and behave like the final device. A prototype may include a custom PCB, embedded firmware, mechanical components, connectors, batteries, displays, sensors and communications hardware.

Electronics development

Schematic design, component selection and PCB layout. The board may need to accommodate constraints on size, power consumption, wireless performance, thermal behaviour and manufacturability at the same time.

Firmware development

Embedded firmware controls the behaviour of the system: sensor acquisition, motor control, communications, power management, data logging, user interfaces and device configuration.

Mechanical integration

The electronics have to physically fit the product, which brings in enclosure design, mounting, connectors, buttons, displays and batteries.

Prototype manufacture

The prototype PCB is manufactured and assembled, and several iterations may be needed to find and resolve hardware or firmware issues.

Typical cost: £20,000 to £60,000+. A small battery-powered sensor with a simple wireless link is relatively straightforward. A product with multiple PCBs, wireless communications, motors, displays and a custom enclosure needs considerably more engineering.

Budget for iterations. A first prototype is rarely perfect, engineering development is iterative, and the cost of changes belongs in the plan from the start, as this is where most field failures are cheapest to find.

4. Minimum viable product

The MVP is where the product becomes suitable for meaningful real-world testing. A prototype shows the product can work. An MVP shows it can work reliably enough for its intended users and environment, which usually means improving:

• hardware reliability;
• firmware stability;
• power consumption;
• wireless connectivity;
• user experience;
• mechanical design;
• manufacturing process;
• component availability;
• durability.

The MVP may be tested by customers, researchers, internal teams or other intended users, and their feedback used to identify changes before production is funded.

Typical cost: £50,000 to £100,000+. An MVP involves substantial engineering because several parts of the product now have to work together reliably. Costs rise where the product needs mobile applications, cloud services, complex firmware, custom mechanics or multiple hardware revisions.

For startups this is often a funding milestone: something credible enough to demonstrate the technology, test with users and support the next round of investment or commercial development.

5. Preparing for production

Getting a prototype to work is very different from designing a product that can be manufactured reliably at scale. Production development turns an engineering prototype into a manufacturable product, covering design for manufacture and assembly, component sourcing, PCB optimisation, manufacturing test and production programming, quality control, reliability and regulatory testing, documentation, supplier selection, tooling and the final enclosure.

Component availability matters more here than anywhere else. A part that is perfectly suitable for a prototype may be unsuitable for a production product if it has limited availability, a long lead time or an uncertain lifecycle, so the design may need to change before production.

Typical cost: £100,000 to £200,000+. This is where costs can increase substantially for more sophisticated products, because production development can require several disciplines working together, multiple iterations and specialist testing. The final figure depends heavily on the product and the expected volume.

What determines the cost

There is no universal price, because every product has different requirements. The biggest factors are:

Product complexity. A simple sensor is fundamentally different from a medical device, industrial controller or robotic system. The number of components, interfaces and operating modes all affect development time.

Custom versus off-the-shelf hardware. Existing modules and development boards reduce development time in the early stages. A fully custom design gives far more control over the final product but requires more engineering.

Firmware complexity. A simple device needs relatively little firmware. A sophisticated one may need real-time control, wireless communications, data processing, power management, secure communications and extensive testing.

Connectivity. Bluetooth, Wi-Fi, cellular, LoRaWAN and similar technologies each add development and testing work.

Mechanical requirements. A custom enclosure, waterproofing, moving parts or a very compact form factor all add engineering.

Regulatory requirements. Some products need far more testing and certification than others. Healthcare, industrial and consumer electronics each carry specific requirements that need to be considered during development, not after it.

Production volume. A product with ten prototypes has very different requirements from one that will eventually be built in tens of thousands. Production requirements should be considered early rather than bolted on at the end.

How to reduce the cost

The most effective way to control development costs is to manage technical risk early. Building the finished product immediately is expensive: if a critical assumption turns out to be wrong after the custom PCB, enclosure and firmware exist, the rework is significant.

A staged approach reduces that risk, with each stage producing the information needed to make the next investment with more confidence:

1. Concept: define the requirements and the technical approach.
2. Proof of concept: test the most uncertain technical elements.
3. Prototype: build the first integrated version of the product.
4. MVP: test the product in a realistic environment.
5. Production: optimise the design for manufacturing and scale.

Do you need to develop everything from scratch?

No. One of the most important decisions in electronic product development is what should be custom and what should be bought or reused. A product might combine an existing wireless module, an off-the-shelf battery, standard connectors, a commercially available sensor, an existing microcontroller platform and a standard power supply with a custom PCB and custom firmware.

That dramatically reduces development time compared with designing every part from scratch. As the product matures, some off-the-shelf components may be replaced with custom solutions if production requirements justify it. The right balance depends on the product, the budget, the technical requirements and the expected volume.

When to involve an electronics development company

As early as possible. You do not need a finished specification or a circuit diagram before speaking to an engineering company, and involving an engineer early is how technical risks get found before they become expensive problems.

A useful first conversation covers what the product needs to do, who will use it, what you have already built, what technology you are considering, your target unit cost, expected volumes, the stage you are at now, and what the funding or development budget looks like. That is usually enough to identify the appropriate next step.

How Denotec can help

Denotec provides electronics and embedded systems development for startups, universities and established businesses, from early technical investigation through to working prototypes and production development. That covers electronics and PCB design, embedded firmware, proof of concept and prototype development, hardware testing, product integration, design for manufacture and technical consultancy.

We can work with you at any stage. If you have an idea but do not know where to start, we can turn the requirements into a practical technical plan. If you already have a prototype, we can develop the electronics and firmware needed to take it further. If you have an existing product that needs a new PCB, new firmware or engineering support, we can work from your existing design, and the robotic controller study is one worked example.

How much should you budget?

There is no single number that applies to every electronic product. As a rough guide, a relatively simple project might begin with a £10,000 to £30,000 proof of concept, while a more complete prototype could require £20,000 to £60,000. A commercially testable MVP may require £50,000 to £100,000, and taking a sophisticated product through production development can require £100,000 to £200,000 or more.

What matters most is understanding what you need to prove before committing to the next stage. You do not need a six-figure budget to start developing an electronic product. In most cases the first step is a much smaller technical project designed to answer the questions that decide whether the larger development is viable.