There are two primary numbers to be concerned with: Cost of Goods Sold (COGS) and the retail price to consumers. COGS is what it costs you to build and sell the product. The retail price is what a consumer pays for it. The difference is profit -- hopefully!. You need profit to make the product viable to produce and to -- again hopefully! -- fund the development of your next cool product.

COGS isn't always an easy number to calculate. Some parts of it are well defined, like component costs. Other aspects can be harder to nail down. COGS also includes:

• Cost of prototyping your design -- there might be more than one prototype build.
• Cost of the bare, unpopulated printed circuit boards (PCB).
• Cost to assemble the circuit boards -- stuff the boards.
• Cost to ship bare and/or assembled boards to you -- you may incur more than one shipping cost.
• Cost to test the assembled circuit boards -- you don't want to ship non-working products.
• Cost of the packaging your product is shipped in -- boxes, bags, tape, labels, and packing materials are NOT free.
• Cost of the shipping to your customer, to possibly include cost of you taking boxes to the shipper.
• Any and all advertising costs -- if nobody knows about your product you won't sell any.
• Spare product in case you have to repair/replace defective units -- what percentage extra should you build? What is your warranty, if any?
• Your time -- Is your time worth zero? What do you think your time is worth?
• Wages and benefits for any employees you may have.
• Overhead for your place of business. Electricity etc. isn't free.
• Whatever I've forgotten = intangibles… There’s always something.

Your retail price is determined by your COGS and the profit margin you add. Determining that margin number can be tricky. Too high a margin and your retail price might result in fewer sales. Too low a margin and the net profit can be depressingly small for all the work you've invested. If all you do is break even on your costs – or worse lose money – there is little incentive to go through all the trouble to create a product and bring it to market. Your time and effort are worth something! Profit can be used to fund development of your next cool idea too. Prototypes cost money.

It is really easy to research these topics and collect all kinds of advice regarding "rules of thumb" and how much margin you should add to make a product worth producing and selling. I encourage you to do that research when determining the margin for your products. You should also research what similar products cost -- if any exist. This is a great indication of what the customers are willing to pay.

Another thing to consider is whether or not your product can command a premium price compared to others in the market. Is your offering differentiated in some compelling way that would entice customers to pay more for it? The value you can add to your product is an important factor when determining retail price.

Yet another thing to consider is whether or not you will be selling the product directly to customers or using resellers. Companies like Amazon can potentially get your product in front of millions of eyeballs. They don't do that for free though. Their fees go directly into your COGS and you should adjust retail pricing accordingly.