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  4. How do I Develop an Existing Product in MikesBikes Introduction

How do I Develop an Existing Product in MikesBikes Introduction

After the third rollover, you will have a new Development menu which enables you to invest in Research & Development (R&D).

If you want to invest in R&D, your options are:

1. Improving your product’s style & tech specifications;
2. Reduce manufacturing costs; or
3. Both of the above.

On this screen, you will need to select a New Project Design for your existing bike.

MikesBikes Intro Product Development Screen

1. Improvement to Product Specifications

MikesBikes Intro Improve Product Specifications

Making this type of improvement is important if you have a Mountain (medium sensitivity) or a Road (high sensitivity) bike (see Market Information Report).

Remember that some markets are very sensitive to product specifications and some are not.

The Research and Development cost for this project is $1 million.

2. Reduce Manufacturing Costs

This project will decrease the manufacturing costs per unit produced, which is also known as the “unit cost”.

MikesBikes Intro Cost Reduction

Example:

If we sold 20,000 units last year with a per unit cost of $185, our total manufacturing cost was $3.7m (20,000 x 185)

If we sell the same amount, 20,000 after reducing our manufacturing costs to $133.73 our cost to produce will be $2.674m (20,000 x $133.75).

Which will result in an estimated $1m annual savings.

Reducing manufacturing costs will contribute to increasing your Gross Margins.

The Research and Development cost for this project is $1 million.

3. Improvement to Product Specifications and Cost Reduction

This project will improve both your product specification index and will reduce the manufacturing costs of each unit.

MikesBikes Intro Improve Product Specs and Cost Reduction

The Research and Development cost for this project is $2 million.

 

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