Optimizing Prototype Costs: Scaling From One Unit to Thousands

For companies working to develop a new product, the journey from an initial first-of-its-kind prototype to full-scale production presents a series of tough decisions.  Having a clear product roadmap and reviewing it often can help avoid costly mistakes while scaling. 

The cost for prototype components is often astronomical in single quantities, but you can quickly realize savings as build quantities increase 10x again and again. Throughout my career in new product development, I’ve studied three critical inflection points where prototype costs drop significantly.  

Before scaling production, it’s essential to differentiate between the two basic types of prototypes used in early development… 

Understanding Prototype Fidelity: The First Two

Early prototypes generally fall into two main categories.  Both are important, but failing to identify which one is most important to your product idea can leave you struggling to receive helpful user feedback. 

Works-like Prototypes

Works-like prototypes focus on validating the core functionality of a concept and confirming production feasibility and user desirability. Typically built with plywood, 3D-printed parts, or off-the-shelf components, these prototypes allow engineers to test early product requirements and assumptions before refining the final design. 

My team likes “ugly” prototypes because they’re low-cost and usually solicit better feedback from user testing.  If you present someone with a “shiny” prototype, they might try to disguise their honest reactions. This is especially true with friends and family. 

Looks-like Prototypes

Looks-like prototypes are aesthetically representative models meant to simulate the final product’s form, fit, and finish. These can be physical prototypes but don’t have to be.  Rendered images can be especially cost-effective and provide great clarity, especially when paired with an ugly works-like prototype.  

Looks-like prototypes are great for investor pitches and marketing materials. A well-balanced product development roadmap integrates both types of prototypes, ensuring that the final design is both functional and manufacturable before moving to larger production runs. 

3 Scaling Strategies for Cost-effective Prototype Manufacturing

With a couple of works-like and looks-like prototypes behind you, you’ve come a long way since the original product concept.  It’s clear now what problem you’re working to address, and you’ve validated that your product is a viable solution. 

A common scenario is to over-tool too soon based on optimistic sales projections, only to have to make costly tooling modifications due to new user insights, manufacturing issues, etc.  Understanding and applying these scaling strategies can help you manage cash flow and reduce your time to market, ultimately increasing your odds of a successful product launch. 

1. Small Production Runs (10-20) Units: The Power of Batch Building

A single prototype is typically built using high-mix, low-volume methods like laser cutting, 3D printing, and manual assembly. While effective for proof-of-concept, these methods come with high per-unit costs due to setup, labor, and material waste.  

However, moving to a batch of 10-20 units allows for significant cost reductions by leveraging: 

• Fabrication efficiencies – Instead of fabricating parts one at a time, processes like laser cutting and CNC machining can optimize material use across multiple parts, reducing scrap and setup time.
• Batch building – Repeating the assembly process multiple times also allows for workflow optimizations and reduced labor time per unit. It also provides an intuitive way to introduce basic quality practices before getting into detailed assembly instructions and control charts.  
• Small part MOQs – Even small costs like nuts and bolts add up quickly.  Buying these off-the-shelf components from established suppliers can reduce sourcing headaches but often requires minimum order quantities of 25-100 pieces.  Often, you can build a dozen prototypes from the same boxes of hardware. 

The cost of building a few prototypes is often surprisingly close to building a single prototype. Most importantly, having a few extra prototypes comes in clutch during ongoing design engineering and user testing. Now you can leave a prototype with that key customer without the fear of never seeing it again. 

2. Mid-volume Production (100-200 Units): Bridging the Gap

As demand continues to increase beyond small batches, a new inflection point arises. These units are almost always sellable units to fulfill pre-orders or to meet initial sales demand.  

Here at a volume of 100-200 units, some additional opportunities arise: 

• Manufacturing optimization – At this scale, sheet metal forming, CNC machining, and die-cutting become more cost-effective compared to purely laser-cut parts.  For plastic parts, urethane casting and soft tooling (i.e. aluminum injection molds) can also reduce the cost of repeated production runs. 
• Partial automation – Simple automated assembly aids, such as pneumatic presses, fixture-based soldering, or guided fastener placement can improve consistency and reduce labor costs. When amortized across the initial mid-volume production run, they can provide further cost savings on follow-up production runs.  
• Early design refinements – Building a small run provides critical insights into manufacturability and statistical capability, reducing costly design iterations at higher volumes. Design changes that reduce part count, simplify assembly, or enable easier fabrication can lead to further cost savings. 

3. Scaling to 1,000+ Units: Full Production

Each industry has a different definition of what constitutes “high-volume.” For example, a medical device company may only produce 10,000 units of a product over a decade while a large automotive OEM will see those same volumes each week. Regardless of the exact quantity, additional opportunities for cost reduction can continue to be realized across the life of the program.   

Key strategies here might include: 

• Supply chain optimization – Establishing reliable suppliers, sourcing alternative components, and implementing just-in-time inventory strategies help mitigate delays and control costs. Working with suppliers to negotiate better rates on materials and components further drives down unit costs. 
• Quality control implementation – As defect rates become more impactful, systematic quality checks (e.g., first-article inspection, functional testing) help to ensure a positive user experience.  
• Ongoing value analysis – At higher volumes, it’s important to revisit initial product requirements, identify BOM components to commonize, conduct time studies for production insights, and explore other industry best practices that can continue to lower the piece price of manufactured goods.   

Need Help Scaling Prototypes Smartly? Contact Us

Understanding when and how to transition from one-off prototypes to small batch production and then to scaled manufacturing can make or break a product launch. It’s important to plan these steps to ensure efficient use of funds while maintaining flexibility in design and production. 

If you’re navigating this process and need guidance on optimizing costs through smart scaling, my team of product development engineers can help. 

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