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An estimated expenditure of $500,000-$1,500,000 is required to develop a bike design for another market segment. This expenditure includes one-time costs for making the desired changes in the technical specs and the design/style attributes. These changes include finding new raw materials suppliers, making any necessary changes to manufacturing capabilities (e.g. toolings), and creating manufacturing process routings. Any prime cost reduction would require additional expenditure. It may be financially prudent to spread development costs over a couple of years.
Note also that product prime cost is highly dependent upon the level of technical specifications (since this takes a lot of work), but depends very little on the style/design attribute. Your original adventurer bike, for example, may have a product prime cost of $300, as compared to around only $60 for a leisure bike (because of lower tech specs).
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Time to complete a product design project |
1 year |
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Cost per unit of change in Technical Specs |
$20,000 |
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Cost per unit of change in Style/Design |
$1,000 |
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Product (Prime) cost for each unit of Technical specs |
$4.50-$5.00 |
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Product (Prime) cost for each unit of Style/Design |
10-15c |
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Minimum realistic project expenditure |
$100,000 |