For the next few weeks, John Teel, Founder of Predictable Designs, will be sharing a series of guest blog posts with us, helping readers gain insights into strategy, design thinking, and how to get great product ideas to market. John is an electronics design engineer, serial entrepreneur, and blogger, who now focuses on helping hardware entrepreneurs, startups and small companies through his Hardware Academy program. Check out his website for more insights and to learn more.

There are many steps required to bring a product to market, but ultimately, it all starts with the product idea itself. If you have the wrong product idea, then all the other steps, no matter how well you perform them, won’t really matter.
I always say execution is where the true value is, but it still has to start with the product idea, and it’s really critical that you select the very best one to focus on.
Today we’re going to countdown 12 of the best ways for you to determine if you are focusing on bringing the best idea to the market. Although all 12 are important for your success, pay special attention to the last three.

### 12 – Easy-to-Reach Market

You want to choose a product that has an easily-reachable market.
Perhaps you may be thinking, “everyone in the world can use my product. It doesn’t matter their age, location, gender, occupation, or income – they all will want it!”

### 4 – Recurring Revenue

Many say the holy grail of making money is to create recurring revenue streams. Recurring revenue simply means that your customers pay you a fee automatically every month. Most of the online software services you use are paid for on a monthly recurring basis.
If someone buys your hardware product, can you add a monthly fee to use a web service or an app that relates to your product?

Finding a way for your business or product to have recurring revenue will be a huge boost for your company, especially if you ever want to seek outside professional investments.
A lot of investment companies like this aspect because it makes revenue more predictable and allows a company to grow much faster. For instance, Bolt.io is an angel investment group that focuses on hardware products, and they specifically prefer hardware products with a recurring revenue model.

Recurring revenue is such a coveted way of making money because it’s predictable. Obviously, people can cancel their membership or subscription, but in general you will have a group of customers that just keep paying, allowing you to know how much you’re going to be bringing in each month.

### 3 – Potential for a High Profit Margin

I know developing and marketing a new product can be tremendously exciting and fun. But ultimately, the goal is to make money, right?
This means you need to focus on a product with a high profit margin. You ideally want the suggested retail price for your product to be about 4x what it costs to manufacture.
You can push that down to 3x the manufacturing cost, especially if you’re selling direct to consumers and not going through distributors or retail chains, but I would not recommend going lower. For one thing, it becomes exceptionally difficult to grow a business with low profit margins.
That being said, you can’t expect to make a high profit when first starting. You’ll be lucky if you can break-even on your first small production run. Many times you will need to sell your first several hundred units at a loss.
As your production volumes increase, so will your profit margin. Once you reach volumes of 10,000-100,000 pieces for most consumer products, that is when you should expect to make a significant profit.

The higher your profit margins the easier it will be to grow your company.

Profit should never be your immediate goal; that will come later as you scale to higher volumes. In the early stages, focus your efforts on minimizing your development costs, not on maximizing profit.
However, you do need to have accurate estimates on what your manufacturing cost and profit margins will be once you reach higher volumes.

For example, you may break even on volumes under 1k, make a small profit on volumes between 1,000 and 10,000, then make a profit margin of 33 percent for 10,000 pieces, and finally reach 50 percent at volumes of 100,000 units. You just need to know up front that once you reach high enough production levels, a significant profit is possible.
If you determine in your analysis that 25 percent profit is all that can be made, even at high production volumes, then you likely may want to consider a different product or an increase in sales price.
Keep in mind that investors love high profit margins (of course, right!) so having a higher potential profit margin will make it easier to find them.

### 2 – Affordable to Scale to Manufacturing

You want a product that’s affordable to scale from the prototype stage to mass manufacturing. One major challenge of scaling a product to mass manufacturing is the cost of injection molds required for any custom plastic parts.
Each custom piece of plastic will require its own injection mold. For really high volume production, these molds are extremely expensive – a minimum cost will be around $1,500 for a simple, low-volume mold. More complex molds for high-volume production can cost tens of thousands of dollars each. Although developing a product that requires a bunch of custom shaped plastic pieces may be affordable using 3D printing, it will become significantly more expensive to scale when injection molding becomes required. For example, if your product requires ten custom plastic parts, then you will need ten separate molds. Each mold will cost anywhere from$1,500 to \$50,000 depending on the production volume and part complexity.

### 1 – Simple and Affordable to Develop

The number one most important attribute of a winning product for a startup is that it needs to be realistically affordable for you to develop and prototype.

Product development is much more complicated than most lay people can imagine, so you must embrace product simplicity in order to have a real shot at success.
It’s really critical that you, especially for your first product, try to make the product as simple as possible. That way your development cost and your time to market will both be minimized.

It’s important that you get your product to market as fast as possible so you can begin gathering market feedback. Then, you can use that feedback to potentially modify the product to meet what the real market demand is.
I always encourage the concept of a Minimum Viable Product (MVP). Let’s say your product’s core functionality is Bluetooth audio, but you are also considering potential secondary functions such as motion detection or GPS tracking.
In such a case it is generally best to focus on only the core, essential functions for your first product version. Once you have real market data and sales, then you can consider adding any potential secondary functions.

Conclusion:
The real value may be in the execution, but it all starts with the idea. You need to make sure you are putting your time, money and effort into a product that has the best chances of success.
If your product idea isn’t the best idea to pursue, wouldn’t you rather know it now instead of later? You need to always be able to pivot as fast as possible. The more you know, and the earlier you know it, the better!