What is the Cost of Innovation: – This is a question that any creator-entrepreneur asks himself. You think you have a landmark innovation, but you want to make sure. How do you evaluate your product or service? Below this post is actually all about showing you the importance or a cost of innovation you are showing to world.
What is the Cost of Your Innovation
Here are four areas to explore to drive your analysis: technical, marketing, commercial and financial viability. The first two are presented in this post; the two following are the subject of a second publication.
What is the technical Feasibility of your Project?
For an innovative product, the question of technical feasibility must be at the heart of the analysis. Technological parameters poorly controlled and it is, at best, the cost price that flies away; at worst, the technical death of his innovation. It is not possible to ignore a technological qualification worthy of the name.
Is innovation concerned with standards? Is it subject to special regulations?
All projects must start with an analysis of the legislation. The designer must identify and take into account the standards and other regulations in force. Neglecting this step will have the direct impact of making a product that will be impossible to sell.
Are there Patents that could be against me?
Do not neglect this legal risk that could annihilate your project. Imagine the situation: you have produced your pre-series and start marketing them. Suddenly, a competitor attacks you for counterfeiting…
What are the conditions of industrial implementation? What are the means of production? Do you have the ability to bring together the technical skills to produce it?
Even if the idea is excellent, it should be ensured that the transition from the prototype to the series will be smooth. The means of production must be studied quickly to know the cost. In addition, the contractor is required to think about ways and means for future manufacturing: integrate resources internally or outsource manufacturing to a third party. In short, define a real industrial strategy!
What are the uses of your innovation?
This is the basic question to ask: what is the point of your product? The answer is not simply to state the main use. For example, for a fryer even revolutionary, it is to make French fries … It is more judicious to reason in term of system of uses. Take our example: the product is for those who eat French fries (we would have guessed it), who have little time to prepare them, who have very little room to put it away (and this is precisely the main innovation: my fryer is foldable!), etc.
What is the market? How to evaluate it? Who are your potential customers?
Having designed a “super practical product” and revolutionary, that’s fine. But that’s not enough … Still need to find buyers! And here, the more innovative your product is, the harder it is to qualify the potential market and prospects to target. With a nuance all the same, To be precise, it is not only the innovative character that will make this analysis difficult, but also the fact that your product is aimed at new uses, that it targets a market that does not exist yet. Despite this, you must have a clear idea of the structure of your market and it’s potential.
What is the competition? Players? Their products and services? Their strengths and weaknesses?
If a project leader claims he has no competitor, it’s suspicious! Competition is not necessarily direct. Watch manufacturers could testify … They face other types of instruments giving the time. The first of these is the cell phone. Competition that seems remote and which, however, decreases the sales of watches … In this regard, a very practical tool to use for your analysis is the Porter model: the 5 competitive forces. It allows, in fact, an exhaustive analysis of all forms of competition.
At what price can you market your innovation? Will you have enough margins at this price?
What will trigger the purchase will be the perception that your prospects will have value / price ratio. It is a formulation that seems simple but synthesizes complex elements. The perceived value integrates a set of elements: the needs of the consumers, their motivations, purchasing behavior, the offer of the competition … One thus understands all the importance of the fixing of the tariffs to make this report favorable. Once the ideal price is determined, its confrontation with the cost will give the margin available in the end.
Hello everyone! This is Richard Daniels, a full-time passionate researcher & blogger. He holds a Ph.D. degree in Economics. He loves to write about economics, e-commerce, and business-related topics for students to assist them in their studies. That's the sole purpose of Business Study Notes.
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