A comprehensive guide of the Costs involved in New Product Development
Introduction
New product development is a deciding factor for the growth and sustainability of a business. A systematic approach for a new food and beverage product development contributes to overall success by increased market share and higher revenue generation. However, the entrepreneur must have an idea regarding the estimate of the cost since knowing the cost helps the entrepreneur to determine the feasibility of the project and obtain funds for investment.
Developing a new product is a staged process, comprising of ideation, market research, ingredient research, prototype development and shelf life studies. Understanding the cost involved in each stage is crucial for effective cost management.
Check out our blog of cost of developing a new product to know about the cost involved at each stage in US dollars.
Cost of developing a new product
The following section elaborates on the cost involved in new product development in Indian Rupees (INR) at every stage, helpful for start-ups in India.
- Idea Generation
The primary objective of idea generation or ideation is to develop numerous ideas that lays the foundation the strategy of new product development. This stage consists of brainstorming sessions wherein raw ideas are listed.
The ideas are often generated by conducting an in-depth consumer market research, which helps businesses obtain consumer insights, a deciding factor which contributes to the success of a product.
The ideas are then screened for feasibility and potential for success, leading to a proof of concept (POC). Screening is often done by conducting a SWOT analysis for the ideas that have been generated.
The cost involved for ideation can range from ₹ 1, 00,000 to ₹ 2, 00,000, and conducting market research can cost from ₹ 1, 50,000 to ₹ 2, 50,000.
- Ingredient Research
Ingredient research refers to the process of selecting, analysing and choosing the components or ingredients best suited for the product.
The main objective of an ingredient research is to find the best combination of ingredients that meets the product specifications and comply with the regulations and adhere to quality standards.
Ingredient research is a critical step in the development of food products, beverages, cosmeceuticals and nutraceuticals.
The cost of ingredient research may vary from ₹ 1, 00,000 to ₹ 2, 00,000; depending on the product and the ingredients.
- Prototype development
A prototype can be defined as a replica of the actual product. A prototype closely resembles the actual product in terms of its sensory profile.
Prototypes are important since they help the start-ups to determine whether developing the final product is feasible before investing significant resources in developing the product, thus making the process more economical.
Other advantages of food prototype development include the modification of sensory properties and identification of potential food safety issues.
The cost of prototyping a product ranges from ₹ 2, 00,000 to ₹ 3, 00,000 for a product.
- Shelf life studies
Shelf life studies involve testing the product for quality, safety and stability. In a new product development, shelf life studies are vital to ensure that the products remain stable, safe and of a high quality when the product is stored in consumers’ homes.
Check out our blog to know more about how shelf life of a food product is determined.
The cost for shelf life determination studies can vary from ₹ 1, 00,000 to ₹ 2, 00,000; provided that the recipe for the formulation is already available.
Considerations
- The costs mentioned at each stage of product development are for a formulation made using two to seven ingredients. The costs may be higher if the product is made using organic ingredients.
- The cost of conducting a clinical trial for formulating a nutraceutical or herbal product depends on the available resources, study participants and adverse reactions.
- Pilot manufacturing comprises of developing products at a small-scale. The cost required for pilot plant contract manufacturing of a product depends on the Minimum Order Quantity (MOQ), cost of the raw materials and logistics [1].
Conclusion
Developing a new product helps businesses to increase their market share and generate more revenue. New product Development follows a systematic process, which helps entrepreneurs to ensure that the product they have intended to formulate is feasible. The basic steps involved in developing a new product include idea generation and market research, ingredient research, prototype development and shelf life analysis. The total cost for developing a new product can vary from ₹ 6, 50,000 to ₹ 11, 50,000. However, this is for a product made using two to seven commonly available ingredients. The cost may be higher for a product made using organic ingredients. Effective cost management is key to entrepreneurial success.
How Food Research Lab Global Contract R&D can help
We are a team of seasoned food scientists and technologists who offer new product development services. Our range of product development services includes:
- Food Product Development,
- Beverage Formulation,
- Nutraceutical Formulation,
- Cosmeceutical Product Development,
- Herbal Formulation,
- Microbiome Solutions,
- Flavour Development and
- Animal and Seafood Product Development.
We assist with product strategy, prototype, formulation, scale-up, sourcing, marketing and reverse engineering. Our comprehensive assistance ensures that the products have an excellent sensory profile, align with consumer insights and adhere to the regulations, ensuring their success.
To know more about the types of products we have developed, check out our case studies.
Let’s create something Innovative and Delicious together
Food Research Lab strives for excellence in new Food, Beverage and Nutraceutical Product Research and Development by offering cutting edge scientific analysis and expertise.
