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Electronics development cost estimation

24-05-2017

The customer, choosing a contractor for the development of electronics, first requests commercial offers from several possible executors and receives a certain spread of price parameters.

Obviously, development projects estimation approach of different companies can vary significantly, as well as the predictive reliability of the assessment and, accordingly, the declared planned and final cost of development.

Proper estimation of the electronics design project involves the study of the technical assignment given by the customer, of the technical requirements and the drawing up of a sufficiently detailed development work, execution plan, including the working time of various specialists, the purchase of the necessary components, the production of evaluation and test facilities, the production of prototypes, etc.

In some cases, it could be not possible to estimate reliably the costs of the entire development project, at the stage of preliminary acquaintance with the project. For example, in the beginning it is necessary to develop an algorithm that provides the required functionality of the device, based on the requirements of the algorithm and taking into account other limitations indicated by the customer, to plan and evaluate the development of a hardware-software solution.

Cooperating with clients from a number of countries and carrying out various projects for developing electronics (processor module development, embedded solutions, analog and digital devices design), our specialists have the ability to compare budgets, and overall costs of the electronics development, as well as competitive offers.

Based on our own experience and the data available to us, we can designate the following coefficient, which allows us to assume the order of development cost without resorting to a full evaluation of the project, or in cases where the customer still does not have a full technical specification or full technical and functional requirements.

With the order of mass production in thousands and tens of thousands of pieces per year, the estimated cost of development services could be defined in comparison with the planned retail price of the device.

Grounding on the data of the costs of various projects executed and evaluated by our teams, it can be argued that if the planned selling price of the device is X, then the cost of the entire device development falls in the range from 200 * X to 500 * X, and the cost of embedded electronics development is from 40 * X to 50 * X.

Here are some examples:

1) Portable device for accounting, displaying and warning about the deviations in the physicochemical parameters of the air. The target sale price is 1,000 USD. The cost of the complete development of the device, from algorithms to the body and preparation for production, is about 200,000 USD. The cost of developing an embedded hardware-software solution is about 50,000 USD.

2) Specialized hardware and software system based on Intel Atom (device similar to a laptop). The target sale price is 2,000 USD. The budget of the entire system development is about 400,000 USD. The budget for the embedded electronics development, including low-level software, without body design, with setting onto manufacture, is approximately 100,000 USD.

3) The system for contactless measurement of the surface profile for industrial quality control solutions, including machine vision, with a target sales price of about 4,000 USD, the complete development of this digital device costs about 800,000 USD. The contract development of electronics and embedded software in this case is around 200 000 USD.

4) Portable thermal imager with wireless connection to the smartphone. The target sales price in the target market is 600 USD. The cost of entire digital device design is about 120,000 USD. The budget for the embedded electronics and software development is in the range of 30,000 to 50,000 USD.

5) Processor module for video data processing and transmitting. The selling price of the module is 350 USD. The design budget of the full solution will be approximately 70,000 USD.

6) Microprocessor relay protection device. The target cost of the device is indicated in 5,000 USD. The firmware-embedded development of this solution is approximately 200,000 USD.

These examples and the ratio of the planned device selling costs and the development budget of the device itself, or only electronics for the device allow us to agree with potential customers in the expectations of customers and the capabilities of developers. In cases where the order of figures corresponds to the expectations of the customer with respect to the cost of development, we evaluate the provided technical requirements for the device.

The project estimation is carried out by our expert group composed of developers and engineers with different specializations and reliable background. The result of the estimation process is the commercial proposal, which includes the detailed work plan, budget and clarifying questions.

We’d be glad to estimate suggested projects, please fill out this Questionnaire and send it to us to info@axonim.com.

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