Costs of Industrial Design
What do industrial design services cost
One of the first remarks we sometimes get when talking about industrial design, is that it must be expensive. In such case, we can only ask what they mean by expensive.
Product and brand development are very strategic activities that can determine the success of a product and company.
The world around us is changing constantly and competition is moving fast. In most industries, consumers are asking for new products enabling them to express their own identity. They just don’t want to settle with products that are just the same as all the others. Such products become commodities, offering you less chance to have good margins. So investing in industrial design can make your product stand out from competition, enabling you to have better margins.
So yes, it costs money, but it will strengthen your brand, create customer loyalty, increase profit and establish growth of your company. So you should actually ask the following question: How can you afford not to invest in industrial design?
Coming back to the initial question; what does industrial design cost?
As you may have imagined, the only answer we can give: it depends.
There’s a huge variety in the products we develop, and not all customers request us to perform the same amount of services on their project.
Depending on the kind of product and services asked for, our involvement can vary from 20 hours for a single part product or (consultancy) service, to over 2000 hours for a complete baby stroller development, covering all 4 phases.
For most projects we estimate the hours we expect the project takes, and depending the services required, we multiply these hours with the hourly rates for these services. In our quotation, we are transparent about the estimated time required for each phase, and we inform you clearly what you can expect from us and which costs are involved.
In some cases we can offer a reduction on the development costs in return for a royalty setup. In these cases, part of our fee comes from a certain percentage on the sales of the product. On such agreements, we share in the development risk. Should the product not generate the expected sales, our return on investment suffers from it. Is the product skyrocketing and generating great sales, we share in the success by more turnover from royalties. A consequence of a royalty construction, is that it is beneficial for us to keep investing in the product by making suggestions for improvements, redesigns, or accessories to extend the life of the particular product.
If you feel Studio STOUT is the right development partner for you or if you would first get to know us better, feel free to contact us. We would be happy to discuss your ideas, development needs and the possibilities we see for setting up a cooperation.
Payment structures, business model
Each customer and each project is different.
We at Studio STOUT are flexible to accomodate these differences as much as possible. We adjust the project setup and process to connect to our customers as seamless as possible.
We feel similar about the payment structure.
As long as we can come to a mutual beneficial payment structure, allowing all involved to succeed in their business, then we are open to discuss all options.
Payment per hour
For short lead time projects and separate services, we multiply the required amount of hours with the hourly rate for these services.
Different services can have different hourly rates. They will be clearly specified in the quotation.
For these projects and services, we will invoice you once the project is finished.
Project fee based on hour calculation
Bigger projects, covering multiple phases, are calculated in a similar way as smaller projects by estimating the hours for each phase. For bigger hour volume projects, we apply a reduced hourly rate to come to a project price.
Our prices are fixed as long as the project specifications and targets do not change.
On innovative projects it can be hard to predict how the project will evolve. In such cases we give an indication of expected hours for the later phases. After each phase, together with the client , we evaluate if the expected hours are still in line with the initial quotation and if adjustment (up or down) is required.
For project fee cooperations, we usually work on a bases of equal monthly payments, starting with a down payment and the final payment once the project is finished.
Reduced Project price plus Royalty
In some cases we can offer a considerable reduction on the project fee in return for a royalty setup.
In these cases, part of our fee comes from a certain percentage on the sales of the product.
Payment terms for the reduced project fee are again based on monthly terms.
Royalty payments are on a quarterly bases, and start once the products are being sold.
In this setup we share in the risk of the development. If the products fails we loose part of the our fee, if the product succeeds we share in it’s success. This type of cooperation forges strong connections between developer and client brand that can spark many new iniatives. We enjoy this type of cooperation a lot !
Besides the ‘normal’ fee based way of working, Studio STOUT is also open to alternative rewarding systems.
We are designers but most defenite also entrepreneurs. In some occasions we believe so much in an idea, concept or project that we are willing to participate in it as a company. This way of working minimizes the initial development cost, supporting the new venture / start up.
Of course we are not able to do this for all projects, but with the right project and the right team involved it is something we love to do.
Please contact us if you have a plan you wish to share with us ! Looking forward to hearing from you.