When you have an idea to develop a web3 product, you need to think about all the problems or requirements of developing a web3 product. Cost is the main thing you should consider the most.
Whether you’re adept at bringing a web3 product to market or this is your first time looking at the process, it’s critical to estimate the cost of developing a web3 product. If you don’t get your cost estimates right, there will be some serious effects on the overall budget.
A large part of your product investment will come in the design and prototyping stages. This is the most expensive stage in the development process, and knowing the price of everything in advance is not always easy. That’s why doing a price cost estimate is essential.
Furthermore, estimating product development costs will give you a good idea of your overall project’s feasibility. It helps you look at your design in stages to understand the cost of each stage. You can then model your estimate based on different funding rounds in the investment cycle.
Finally, you need to know how much it costs to develop your web3 product so that you can estimate how much it will cost to sell. In this post, we’ll explore the cost estimating process and the factors you need to consider in order to create a cost estimate.
The Three Steps of Product Development Cost Estimation
Estimating Web3 product development costs includes 3 steps.
The first stage of estimating web 3 product development costs is design planning.
Step 1: Design Planning
In Series A, investors focus on an idea. At this step, you may not even have a Web3 prototype. What you are selling is an idea, so you need to understand the costs involved in bringing that idea to life. You need to answer the following questions:
- What is the main goal of the Web3 product? Every product has a pain point that it’s designed to solve. Clearly outlining your goal will help the designer understand your main goal.
- What is a verbal description? Some artists approach us with just a vague concept, while others have a finished prototype. We can work with both. At a minimum, you should be able to paint a visual picture of your product.
- What are your material preferences? Material selection will have a great influence on the final result and product design costs. To best understand development costs, you should have a general idea of the material components of your project.
Ideally, your partner will have a Q&A session with you to determine all the basic needs for your design. Being able to visualize the product and describe it to others is a key focus in budgeting for this step.
Step 2: Production
The production phase is the second most important step in estimating product development costs. This stage is not only about bringing the product to market, but also involves understanding the needs of your target audience. With that in mind, you need to review the following questions:
- What is the main need of your web3 technology market? Creating a complex, high-quality product won’t matter if your target audience can’t afford it. Considering the main market need, whether it’s cost, convenience, quality, or something else, will help you establish better production practices.
- What was your initial product development activity? Knowing how many units you need to produce for your test market is an essential part of a successful implementation. You’ll need enough to showcase your product, but not so much that you’ll end up with a backlog of outdated items if you decide to revise the design.
- What is your cost per unit? Product development costs per unit can vary significantly based on your time, materials, and design. Initially, focusing on unit prices can help you understand the challenges you may face when it’s time to scale your project.
Tools can be one of the most expensive and overlooked parts of a web3 project. You’ll need special equipment to recreate your design, like templates, cutters, and other custom tools. Those costs need to be assessed at this point to help you scale production later.
Step 3: Distribution
By the time you get to step three, you’ve got a full concept and product development plan, but perhaps not many powerful distribution channels. Initially, you can choose to sell your products directly. In the third step, you will probably be too large to manage the task and will need to work with retailers and other third parties. When estimating costs for this stage, you should consider several key questions.
- What is your primary and secondary geographic market area? While the Internet enables a globalized economy, as businesses grow, it is wise to make strategic decisions about key markets. It is also important if creating a product requires compliance with specific regional regulations.
- Do you have specialized transportation needs? If you have a fragile product or a particularly heavy product, you may need additional costs for things like plastic pallets, climate-controlled storage, and other specialized handling needs. If international shipping is a factor, you will need to consider customs fees and regional shipping regulations.
- Do you envision adding more products to your line? At this stage, you may have come up with new ideas or applications for your original concept. Here, you may want to look at potential markets and the need for new ideas. Then, if you decide to continue, the process starts all over again.
While it may not be easy to get an accurate cost estimate for product development, it’s an essential process that you shouldn’t overlook. Ultimately, knowing the cost of a web3 product development process will put you on the right track. This way, you can profit from your product and improve the overall health of your business.
For technology startups that do not know how to estimate the cost of developing their project, please contact Satom Studio Venture. At Satom, we have a team of experienced people to help you come up with ideas and guide you through the steps, so you can develop your products with high efficiency.