Product specification: decide it, then test it
A specification (or spec) is a list that says exactly what the product must be. Think of it as a recipe card for the product.
- Size and shape: a bottle that holds 500 ml.
- Material: food-safe plastic or steel.
- Performance: does not leak, keeps water cold for 6 hours.
- Safety and rules: must follow the safety laws of the country where it is sold.
- Cost limit: must cost less than a set amount to make.
Evaluation means testing the sample against the spec. Pour water, shake it, drop it, ask users. If a test fails, change the design and test again. This loop (design, test, improve) is cheap on paper and costly after the factory has started.
Producing the product design
Design turns the spec into something people can see and hold.
- Sketch several ideas on paper or screen.
- Prototype: make a first sample. It can be cardboard, clay or a 3D print.
- Get feedback: let real buyers hold it. Ask what they like and what is hard to use.
- Improve and make the final design, ready for the factory.
Good design is useful, safe, easy to use and nice to look at. Colour, shape, packing and name all send a message to the buyer before they read anything.
Registering intellectual property (IP)
Intellectual property means things made by the mind: inventions, shapes, names, pictures. If you do not protect them, a copycat can sell your idea for less, because the copycat did not pay to create it.
| Type | Protects | Example |
|---|---|---|
| Patent | A new invention or method | A cap that keeps water cold twice as long |
| Design registration | The look and shape | The curve of the bottle |
| Trademark | Name, logo, slogan | The brand mark on the bottle |
| Copyright | Writing, pictures, music, software | The label artwork |
Registration is done with the government office of each country and gives the owner the sole right for a fixed time (trademarks can be renewed). Rules differ by country, so check the local office. IP cannot be registered if the idea is not new or is already registered by someone else.
Setting prices
Price must do two jobs: cover the cost and still look fair to the buyer.
- Cost-plus pricing: price = cost + margin. If cost is 40 and margin is 50%, price = 40 + 20 = 60.
- Competitor pricing: look at what rivals charge and stay near it.
- Value pricing: charge what buyers feel the product is worth (a very good design can charge more).
- Offer pricing: low launch price to win first buyers, or a high price for a premium brand.
The cost is the floor: below it, every sale is a loss. The rival price is the ceiling: far above it, buyers walk away. The margin sits between and must also pay for rent, wages and advertising.
Writing the business plan
Now join all the pieces in a written business plan: the product (spec and design), the price, who the customers are, how you will sell (shops, online), the money (costs, sales forecast, profit) and who will do the work. Start with a one-page summary. Use real numbers from your tests and your price sums. Check the plan again when the facts change.
Trends and issues in product development
- Green products: less plastic, repair and reuse, recycled material. Buyers and laws both push for this.
- Fast sampling: 3D printers and computer models make prototypes in days.
- Online feedback: reviews and surveys show problems quickly.
- Personal choice: buyers want colours, names or sizes of their own.
- Short life of trends: tastes change fast, so makers launch small and learn.
- Issues: copying by rivals, rising material costs, rules about safety and data, and the need to keep price fair.
Try it
Pick any small thing you could make, like a pencil case or a snack box. 1) Write a three-line spec. 2) Draw two designs and ask three friends to choose. 3) Add up its cost and pick a margin. 4) Look at a shop price for a similar thing. Is your price below, near or above it? In the 3D, go to step 4 and slide the margin to see the same thing.
Key formulas and definitions
- Price = cost + margin
- Margin % = (price − cost) ÷ cost × 100
- Price = cost × (1 + margin % ÷ 100)
- Profit per unit = price − cost
- Total profit = profit per unit × units sold
Worked examples
1. A bottle costs ₹40 to make. The maker wants a 50% margin. Find the price.
Margin = 50% of 40 = ₹20. Price = 40 + 20 = ₹60.
2. A bag costs ₹200 and sells for ₹250. What is the margin in percent?
Profit = 250 − 200 = ₹50. Margin = 50 ÷ 200 × 100 = 25%.
3. Cost is ₹45 and the rival price is ₹70. If you match the rival, what is the profit per unit, and how many units give ₹5000 profit?
Profit per unit = 70 − 45 = ₹25. Units = 5000 ÷ 25 = 200 units.
4. Cost is ₹90. A firm lowers its price to ₹80 to beat a rival. What happens per unit?
Price is below cost. Loss per unit = 90 − 80 = ₹10. Selling more makes the loss bigger.
Common mistakes
- Setting price from cost only. Always look at the rival price and what buyers will pay.
- Mixing up margin on cost and margin on price. Here margin % is worked on cost.
- Thinking a trademark protects an invention. A trademark protects a name or logo; a patent protects a new method.
- Skipping tests. A leaking sample found after 10,000 are made is very costly.