A common trait I’ve seen in many hardware founders over the years is their unwillingness to compromise on their first baby.
They select ultra high-precision motors from Switzerland and the best camera from Japan.
Then they’re surprised when their manufacturing cost ends up much higher than projected—projections often based on a unit found on Alibaba, made at a scale of 100,000 pcs per month.
“But all electronics are much cheaper in China!”
True, but only if you select the best value-for-money components. And I hate to say it, but those tend to be Chinese. China offers such a wide assortment of, say, sensors, that you can buy exactly what you need—without paying for over-spec’d components.
When you find out a Chinese equivalent sells for a third of the cost, it’s very hard for first-time founders to let go of their beloved Japanese camera.
After you’ve spent nine months optimizing the cam firmware, are you really going to call off the launch date and redo all that work? Or will you ask some China ODM to quickly redo the design and accept that, from now on, the firmware will be a black box to you?
“We’re the Apple of toaster ovens. Our premium positioning demands every detail be perfect. We need to stay true to the vision!”
To that, I like to quote Jeff Bezos: “You need to be stubborn on your vision, but very flexible on details.”
Especially in the consumer market, every extra dollar spent on a nicer camera means the cost to the consumer will be $3 higher. Factor in tariffs, and the multiplier gets even worse.
Apple spends about $3.5 billion per year on advertising—and has done so for nearly 30 years.
Without that brand power, it’s very hard to command Apple-level pricing. A new brand actually needs to overcome trust issues, often by offering discounts on Kickstarter.
Selling premium components at below-market prices will quickly ruin you.
So, start with the affordable, simple version first. And make sure your picks for key components take China into account.
Asian component makers prefer to sell batches of 100K to factories in China. For them, there’s no benefit in writing English documentation, because small Western orders often bring endless streams of pesky questions. That’s why many Chinese components are not listed on DigiKey or Farnell.
So keep it affordable and simple. An MVP (Minimum Viable Product) is also faster and less risky to develop. Once you’ve built a following, you can then gauge what they’re willing to pay for extra features.
Let me know if you need help optimizing your BOM—and please do so before you spend all that time perfecting your design.
