Roadmap and Cash Flow analysis – need input on Product Development Cost

[Klas]

Hi Peter,

Your “how deep is half of a hole” made me smile:) I understand you need an estimate for potential investors.
First, take a look at this post that can give you some ideas about the costs involved in product development: https://memberzone.apparelentrepreneurship.com/garment-costing-example/
You’ll need on average 3 samples per style before you reach your salesman sample. The manufacturer will typically charge you 2xFOB per sample.
Patterns could average a couple of $100 per style.
You’ll need a designer that can help you with ideas/concept, sketches, tech packs, and also to fit and comment of samples. An experienced designer could charge $500-$1000 per day.
An estimate is that the design phase takes 1-2 days per style.
Then 1/2 – 1 day pers sample, to measure each sample, double-check all details, fit and comment, gather all comments and communicate with the manufacturer.
Remember that some basic styles, such as a hoodie and a polo shirt could be directly developed by the manufacturer and thus reduce the cost dramatically. They might also have “private label” styles that you could use and add your branding.
Hope this info helps to create some estimates.

Garment Costing Example

[Peter Lundmark]

Thanks Klas – smiling is always good 🙂
On the topic – thanks, those inputs helped to get somewhat more informed. And I had read up on the linked post. I have made an attempt to merge the content from linked post, your input and my own thoughts on staying (budget/planning wise) with three style types (simple, medium, complex) which I had planned to attach as a picture here (since this form and table format are not best friends). Well, could not find a way to attach a pic either. If there is any way to do that please let me know.

BR // Peter

[Klas]

Hi Peter, you can now attach an image here in the forum. Just use the “insert image icon” in the top bar when you are writing something.

[Peter Lundmark]

Nice. So my attempt then attached.

Reading notes:

• Since I am trying to estimate financial outcome based on PRP 2021-2026 I had to figure out a way how to add some reality into product development costs (PDC)
• Using three style types based on product complexity became my solution
• Using input from various sources I did calculate costs for simple, medium and complex products as shown in picture
• I also from a planning point of view do assume that some elements of PDC would decrease when developing future 2.o versions or similar styles, thus adding a second PDC per type taking efficiency gains into account
  (also taking into account designer brand awareness, efficiency in working relations with PD stakeholders etc.)

Any input or thoughts on my attempts to add some dynamics into financial outlooks when considering quite a comprehensive PRP span?

BR // Peter

[Klas]

Hi Peter,

I think this is a great financial projection, with realistic estimates.

In your calculations, I would also add traveling to the manufacturers. The best time to visit factories is with comments on proto 1, because you then have something tangible to discuss plus you will be able to product develop there on site. Meaning you could work with the team to make improvements, have them create a second proto on the spot. And depending on the product, you could even reach a perfect sample, ready to jump to salesman sample (if they have all the correct materials and trims available) This can save you lots of time and money eventually. A trip to Asia is normally a week long to get all the things done. A trip to Europe at the factory can be 2-3 days to get everything done. In Asia, they also want one or 2 days only for relationship building😊