Before I ask my question, I'll start this off by saying sorry for how stupid and ignorant I'm going to sound. For the record, I'm really young and just learning about the business world if that helps.
Now, I'm wondering why entrepreneurs who build a business around their product have to spend SO MUCH money? I was watching Shark Tank and I heard a woman who invented a 3-1 nail polish/nail file/disinfectant contraption (Nail Pak) and she said she had to invest 300k in the business. How does that work? I understand filing a patent could be about $10,000, but making something so simple cost less than $3. Plus, she made an ONLINE business, not a store! What could possibly reach a cost of 300k?
I watched another episode where three or two students created Notehall (buy&sell college notes) asking for 70k for mere customer acquisition. Why does that cost so much? Was it to make a commercial, pay a student of every college to spread the word, etc...? Why not just spread the word around with Craig's list, Facebook, Google ads...?
I frankly don't understand why it costs on average 100k to build a product. If you're not making a physical business and keeping it online, wouldn't you save a lot of money? There's a couple thousand for the patent and a couple of thousand for a prototype let us say. Why not make all your products MADE TO ORDER and save a ton of money? With that method, you'll wait until you get money from the customers and THEN you can spend to manufacture 10s of thousands of product. Furthermore, if you're manufacturing them to be a sold of a popular store, doesn't the store pay the wholesale prices for you to be able o manufacture and send them all the products? This just seems like the common sense way to me to save 100s of thousands of dollar ... *wait* until people pay you for the product and THEN make it.
What am I missing here? I was just very curious how such a process could add up to this extent.
Now, I'm wondering why entrepreneurs who build a business around their product have to spend SO MUCH money? I was watching Shark Tank and I heard a woman who invented a 3-1 nail polish/nail file/disinfectant contraption (Nail Pak) and she said she had to invest 300k in the business. How does that work? I understand filing a patent could be about $10,000, but making something so simple cost less than $3. Plus, she made an ONLINE business, not a store! What could possibly reach a cost of 300k?
I watched another episode where three or two students created Notehall (buy&sell college notes) asking for 70k for mere customer acquisition. Why does that cost so much? Was it to make a commercial, pay a student of every college to spread the word, etc...? Why not just spread the word around with Craig's list, Facebook, Google ads...?
I frankly don't understand why it costs on average 100k to build a product. If you're not making a physical business and keeping it online, wouldn't you save a lot of money? There's a couple thousand for the patent and a couple of thousand for a prototype let us say. Why not make all your products MADE TO ORDER and save a ton of money? With that method, you'll wait until you get money from the customers and THEN you can spend to manufacture 10s of thousands of product. Furthermore, if you're manufacturing them to be a sold of a popular store, doesn't the store pay the wholesale prices for you to be able o manufacture and send them all the products? This just seems like the common sense way to me to save 100s of thousands of dollar ... *wait* until people pay you for the product and THEN make it.
What am I missing here? I was just very curious how such a process could add up to this extent.
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