Low volume tooling is typically lower cost in terms of investment, but lower production capacity and higher unit cost. Gets you to market faster with production units. High volume tooling is more expensive – longer lead time, but more capacity and lower cost.

For new ventures, it usually makes sense to do low volume tooling first, then high volume. Unless you have a ton of booked orders – then it might make sense to go high volume from the start.

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During conceptual design of your product, cost engineering is essential. Once main obstacle that new ventures face is the cost of your product versus desired selling price. Volume can have a huge impact on this. For the gBook e-book reader, you’ll note the cost reduction in total cost from low volume (1000 units) to higher volume (100,000 units) – particularly in the LCD/controller and main processor. This reduces even further when considering volumes of 500,000 to 1M.

However, the entrepreneur should be cautious when selecting features and selling price. Basing selling price on extremely high volume can be tempting – but you may be in a situation of negative margin from introduction until (if ever) you reach the volume estimate. That means negative cash-flow from the onset – which may kill the company before you ever break-even. So, perform your bottom-up and top-down cost estimates – if there is a huge disconnect you may need to cut back on features/capability and/or adjust target market/demographic (higher selling price) to make the economics work. These iterations and cost engineering are essential at the beginning stages of product design.

Research is very difficult.  It can take days to sift through the internet just to make sure that there isn’t another product just like your idea online.  Once you are fairly sure that right now (something could always pop-up tomorrow) there is nothing like it, you widen the net.  Eventually you will find some similar products, but they are different, inadequate and off point.  Having competition is not bad, but they need to be carefully analyzed.  Is the competition a success?  Probably not (because you didn’t find them off the bat), so the important question is WHY?

I found something interesting on Inventorspot, a website that shows new products.  Behold SleepPhones in Fleece

As someone who did a project in the past involving the sleep assistance (audio visual and other) I thought this was interesting. Some of us do listen to music while falling asleep and some of us worry about being strangled by the wire of a set of headphones.

This inventor could have spent days searching for headphones in headbands and probably found several athletic applications. I wonder if the inventor widened the net? Widdening the net can be very hard, how can I take incremental steps backward from my invention towards the issue and find other competition?  A quick keyword brainstorm delivers: sleep audio (mind machines, sleeping cds) sleep speakers and ahh on my second thought I found something interesting / threatening at least worth looking into. This brainstorm was not technology focused (although you should do one of those too) instead it was problem, customer and market focused.

We found: Sleep Therapy Pillow

LESSONS:

1. I am not saying the headband will fail because of the pillow. I am saying that finding competition can be easier if you start taking the customers perspective. Both products solve the issue of being strangled while sleeping, so from a customers perspective they are direct competition.

2. Competition like the pillow whether direct or indirect need to be thoroughly analyzed.  How long has the pillow been on sale, how many have they sold, what is their growth like, where are they being sold?  Think of all of the competitive products that are inadequate (not saying pillow or headphones are) as market trials of a prototype, the only issue is that you are not privey to the specific data (although with a few phone calls you might get some of them).

3. Lean from your analysis.  If the pillows aren’t being sold there maybe several reasons.  One reason that you should not ignore is the problem isn’t very prevalent and severe.  It might be that the marketing effort was weak, so how would you do it better?  Was the price too high, how does your price point compare (pillow $50, headband $60)?

4. When I was inventing, I practically lived on the internet.  Searching for new competition, market data, technical breakthroughs can essentially eat up a year.  It is important to take steps back from the data (search results) and do the analysis.

Last Night I attended my first Inventors’ Association of New England meeting.  It was a great meeting and and interesting talk by Keith Bibby, “inventor for hire” and Professor at the University of Phoenix.  He talked about his experience innovating in the curtain rod industry and selling those products to / through Wal-Mart, QVC and Home Depot.  The buyer pitch was a main topic and the conclusion is that you have two minutes (max) to explain your product.  That isn’t a lot of time to sell your product that you have been working on for years, unless you compress it in an understandable format that buyers understand.  The suggested format was SWOT.  For more info on SWOT go to the Wikipedia Page.

The other major take away from the talk is it’s all about Wal-Mart. Wal-Mart sells approximately 14% of all retail and they are good to work with. They don’t ask for exclusive selling rights, they pass ‘earnings through savings’ back to you and are open to the smaller companies beating out the smaller ‘innovative’ companies.

As I look over my notes from the meeting, there were so many stories of successes and failures that it would take 10 pages to retell them so I will focus on just a few.

The PegBar was a cornerstone innovation in the talk.  It was a new product that was conceptualized (prototyped and then produced by) the shop foreman. Its creation led this company to expand their distribution network into QVC where Keith was doing pull ups on the bar at 2 in the morning.  Take aways: Moto: Buyer relationships are key, do what it takes for the customer.  The PegBar is currently being sold by McMaster-Carr, picture below from their website.

The second story that I would pass on is the Printed Curtain.  Keith had a curtain that had Blue cartoon character, (Blue the dog).  This product was well received by many stores like Bed Bath & Beyond and Wal-Mart but did not do well because of it’s price point.  During the development process, the inventor had agreed to exclusive domestic manufacturing and that forced the price of the curtain upto $12 while most other simple curtains are apx $3.  While the curtains did very well at clearance prices ($4) the consumers were too used to the existing price point to pay the high end price for kids curtains.