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Hardware Startup Costs: What the First 18 Months Really Cost
Hardware startup costs for the first 18 months: team, tooling, builds, certification and inventory, with dated ranges and the costs founders forget.
by the HardwareMap editors4 min read
Contents
Hardware startup costs for the first 18 months usually run from under $1 millionest for a board-level developer product to $1 million to $3 millionest for a connected consumer device, team included. Most of it is salaries and first inventory, not tooling. This note breaks the budget into lines, for founders following how to start a hardware company.
Every range below is dated and indicative. Costs move with volume, region, tariffs and the quote you negotiate. Use the ranges to sanity-check a budget, then replace each line with real quotes. The per-unit side, what each unit costs after launch, is in hardware unit economics.
Hardware startup costs by line item
For a connected consumer device with one or two custom enclosures, from proof of concept to the first production run:
The tooling line has its own notes: injection molding cost and injection molding tooling cost. For engineer pay bands that feed the team line, see hardware engineer salary.
Hardware startup costs month by month
Spend is not flat. It steps up at each build and spikes at the first purchase order.
The shares are a planning shape, not data. What matters is the timing: the largest single payment, the production purchase order, comes after the money spent proving the product works. Raise for that payment before you need it. The build sequence behind the table is in prototype to production.
A quick runway check: add the team line for 18 months, the one-off lines (design, tooling, builds, fixtures, certification), and the deposit on the first purchase order. Then add a contingency of 20 to 30% for the forgotten costs below. If the total exceeds the cash you have plus the round you can realistically close, cut scope before cutting quality: fewer SKUs, fewer colors, one market at launch. Each extra color is another set of molded parts to approve, and each extra market is another certification file. A single SKU in one market is the cheapest first production run there is.
Certification, the line with the widest range
Certification cost depends on what the product does, not how complex it looks. A product with a radio sold in the US falls under FCC Part 15. Sale in the EU requires CE marking under each directive that applies. Mains-powered and lithium-battery products often need a safety listing from a lab such as UL. The cheapest lever is a pre-certified radio module: the module carries its own radio approval, which can narrow the testing your product needs. Confirm scope with a test lab before you budget, because the lab's quote is the only number that counts.
The costs founders forget
The line items above are the ones on every template. These are the ones that blow budgets:
- Repeat builds. An EVT2 or DVT2 is normal on a first product. Budget one extra build.
- Tooling changes. A mold change after DVT can cost $1,000 to $15,000est and two to four weeks, per change.
- Certification retests. A failed emissions scan means a board change and a second lab session.
- Minimum order quantities. A display, battery or custom cable may only be sold in reels or lots far above your first run. The excess is cash on a shelf.
- Freight and duty on samples. Air freight on every EVT and DVT shipment adds up, and import duty applies to prototypes too.
- Spares and returns. Hold a few percent of the first run for warranty replacements, and budget the reverse logistics.
- Non-recurring engineering (NRE). Contract manufacturers often bill line setup, programming and fixture work as NRE, separate from the unit price.
Three budget profiles
Board-level developer product. A dev board or module sold online to engineers. Off-the-shelf enclosure or none, pre-certified radio module, assembly at a turnkey PCB house. The team can be two or three people. Founders in the index show this can be funded from revenue: REV 26.09 records no disclosed outside rounds for Adafruit Industries or Prusa Research, both of which sold to makers early.
Connected consumer device. The table above. One or two molded parts, a custom board, a radio, a battery, an app. Most founders fund this with a seed round plus preorders or crowdfunding. Flipper Devices launched Flipper Zero on Kickstarter in 2020, so customers paid for the first run before it shipped.
Robot or vehicle. Many custom actuators, machined and cast parts, safety certification, field testing. Budgets start at several times the consumer case and keep climbing with each prototype generation. In the index, Formic sidesteps part of the buyer's cost by selling robots pay-as-you-go to mid-size factories, which moves capital onto its own balance sheet instead.
How founders raise for each profile is covered in hardware startup funding.
Frequently asked questions
How much does it cost to start a hardware company?
For a connected consumer device with one molded enclosure, the first 18 months usually cost between one and three million dollars including a small team and a first production run. A simple board-level product sold to developers can cost well under a million. Robots, vehicles and regulated medical devices cost several times more because builds, testing and certification are larger.
What is the biggest cost for a hardware startup?
People. Salaries for engineers over 18 months usually exceed tooling, builds and certification combined. The second biggest line is first production inventory, because factories and component distributors want deposits or full payment before units ship. Tooling is the cost founders worry about most, yet it is often smaller than either of those two lines.
How can a hardware startup reduce costs?
Use off-the-shelf modules for radios and power instead of custom designs, which also shortens certification. Keep one molded part instead of three. Merge EVT and DVT on simple products. Use printed or machined parts until the design stops changing. Take preorders so customers fund part of the first inventory. Each of these trades some unit cost or risk for cash.
Do hardware startups need to pay for inventory up front?
Usually, at least in part. Contract manufacturers often ask for a deposit when the purchase order is placed and the balance before or at shipment, because they buy components on your behalf. Long-lead components may need non-cancellable orders months ahead. Terms improve with volume and payment history, so the first production run is the most cash-intensive.
HardwareMap records what founders raised and built, from first prototype to production. Building one? Submit it and get a part number.
Building one?
Submit it to the index and get a part number. Every entry is reviewed by hand.