Product Development Stages

Optimizing product design for production
When you have decided to produce a final prototype of a product, you have to communicate the information to others involved in buying materials and production. Most apparel businesses use specification sheets for this purpose. The information necessary to purchase the right material in the right amounts can be indicated. Below is a sample materials specification sheet for a simple T-shirt.

View materials specification sheet here

A picture of the product with the sewing operations, stitch types, and seam allowances is needed for the production department and sewing machine operators. The exact dimensions of the finished product and the acceptable tolerances (e.g., a seam allowance can be +/- 1/8" off) can help in quality assurance.

A sample production specification sheet is shown below.

A specification sheet is developed for each product

The commercialization matrix
To get a product to market, you need to decide on

• Production method
• Cost position
• Volume
• Profit risk

Optimizing your product for production focuses primarily on the first three items: production method, cost, and volume.

Production method
The first decision is about production method. Once you have settled on a prototype design and material, you need to prepare the design for production. This requires a product that can be easily manufactured in quantity and at a price that will be profitable.

The prototype patterns and construction methods often need to be modified by

• changing the shape of the seams to be more easily sewn
• reducing the number and types of seams
• choosing materials that are easy to cut and sew in volume
• reducing the amount of fabric or fabric waste by adjusting the design.

If you choose custom production, you will make individually designed and produced products. Your prototype may not need changes before commercialization, i.e., you may make only one final product. Your profit will come from high price rather than high volume.

The objective of mass production is to make the production process cost effective by

• increasing volume while
• reducing material and labor costs.

Modifying the prototype to accommodate volume and cost requirements is very important in a mass production setup. It requires standardizing and simplifying the pattern pieces, seam allowances, and seam types.

Mass customization is a relatively new business strategy that adds value as well as reduces the cost of the product by

• making products to customer specifications
• involving customers in the design and delivery
• using advanced technology (see the Production module).

This unique approach requires technologies that can produce small numbers of similar products at a low cost. The production cost may be higher than mass production due to individualized design and small production lots. But the cost is lower than custom due to extensive technology use. Making products to order instead of as stock items, reduced inventory cost of finished goods to zero. Profitability depends on getting enough orders at a price that will pay for the technology and individual service.

Cost and pricing
Cost is the second decision you will make to optimize your product for a commercial market. Based on your product concept and business plan, you need to produce at an appropriate cost level for your product. Then, price it to sell.

There are several approaches to pricing that you should consider.

Cost-based pricing starts with how much it costs to produce one unit or piece. The direct costs include materials, labor, and marketing. An overhead cost is calculated based on an annual rate for all design and production. This includes rent, lights, heat, and travel to trade shows, for example. The overhead cost can be calculated for each product unit as a percentage of the direct costs or as a dollar amount and added directly to the unit cost. The final variable is profit.

Direct Cost + Overhead (% of direct cost) + profit = Cost-based Price

Overhead percentages vary widely based on a business's expenses. If you work out of your home, your overhead would be much lower than if you run a factory with 25 workers and extensive equipment. Direct costs might be high if you contracted out all of your production, but your overhead would be lower.

Profit percentages vary dramatically based on the market, product innovation, and the prestige of a product.

Demand-based pricing calculates prices based on

• what consumers will pay
• what comparable products sell for.

For example, you set the price based directly on competitors' prices.

Market penetration pricing is used to enter a new market, setting prices lower than competitors' products in order to gain some of their market share.

If you want to establish a product as a prestige item based on its uniqueness, high fashion, or quality materials, you may want to use status pricing. It assumes customers will pay more than the cost of a product warrants because of its value to them. This strategy can lead customers to think your product cost more for production than it actually did and purchase it for that price. This results in a higher profit for your product. The risk is that customers will not buy the product at all because they think it is overpriced.

The potential for market success and profit needs to be considered before you start production. Only those products that have the potential to sell in high enough volume to make profit should be commercialized.