The Next Big Idea?

According to the U.S. Census Bureau, more than half a million new businesses open every year in this country. Granted some of them are pizza parlors and carpet cleaners, but a lot of them are start-ups put together by an engineer with a great idea. Big business is important, but start-ups are what really drive innovation in this country.

So, what do you do if you are one of those engineers with a big idea but don't have a clue as to whether you can build it or sell it, or more importantly, make a living off of it? Some people will just quit their job and go for it. Others will work late into the night so they can keep their day-job while designing and building it. Some go on their own and some gather a team and get some venture capital money.

There are a lot of ways to answer the question in detail, but sometimes a simple rule-of-thumb can help to at least jump start the process.

For example; take your total bill of materials cost. It doesn't have to be exact because we're just getting a rough estimate. Go to Digi-Key and get costs for, say, 100 or maybe 1,000 sets of your parts.Then go to Sunstone.com and get an online quote for the same number of pcbs. Add that up for your BOM cost. Then double that. That's your cost to a reseller. Then double it again for the price they will sell it at to an end customer.

That means if your BOM cost is $500.00, it will probably sell to customers for about $2,000. It gets a lot more complicated, but this is usually close enough to give you a "yeah, that could work" or a "hmm. I need to to be more creative."

Duane Benson
Ignore the man behind the curtain

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