Adapted from content excerpted from the American Express® OPEN Small Business Network
Present and discuss a design and development budget. This budget
should include the cost of the design of a prototype as well as the
expense to take it into production. Be sure to include labor,
materials, consulting fees, and the cost of professionals such as
attorneys. While the cost of production section may be more readily
apparent to product companies, this section is important for all
businesses. Service businesses have expenses such as consulting
services, training for principals, and preparation of materials,
among many other things.
Tips
- Design and development costs are often
underestimated. Contact a trade group to find out about
average industry costs for developing products similar to
yours.
- When charting costs, provide a contingency plan for
what will happen to costs if problems such as delays, a
failure to meet industry standards, mistakes, etc.
occur.
- Be sure to include the cost of patents and other
elements necessary to the production of your product or
service.
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