Product Development Invoice Template

Product development describes a product’s life cycle from its beginning as an idea to the moment it reaches consumers. Simply put, it refers to the process of bringing a new product to the market. There are a variety of stages involved in product development to ensure it moves seamlessly from its inception to its release to the market. Here are some common stages of product development:

1. Determining the need for a new product: This stage of the process requires conversations and research to determine the types of products that can simplify consumers’ lives.
2. Identifying customers and gauging their willingness to pay: When a potential new product is identified, research has to be conducted to decide whether the product should be developed, how it will solve a problem, and if consumers are willing to become paying customers.
3. Gauging product viability: Time is money, and when it comes to developing a new product, you don’t want to spend too much time on something that won’t make money. This is where product viability comes into play. Generally, a product is tested on an early market to see if larger scale prototyping and design are necessary.
4. Developing a plan: After the concept has been created, a product development team can create a roadmap that identifies the goals and themes of the product.
5. Creating and releasing an MVP: A minimum viable product (MVP) is a product that’s still in its initial phases but is complete enough that consumers can use it. After its creation, the team releases the MVP in what might be deemed its Beta phase to gauge interest, identify the best marketing strategies, test pricing, and recognize any early challenges.
6. Continuing product development following its release: Once a product has been released, the development continues through customer feedback and evolving expansions and enhancements.

Product development is usually not managed by a single person. Instead, there is a team of people who work collaboratively throughout various phases to ensure a product is successfully developed and released. Individuals who work throughout the phases of product development might be involved in product management, project management, agile management, design, architecture, product marketing, engineering, manufacturing, testing, shipping, or distribution.

Specific job titles you might encounter in the field of product development include “product development scientist,” “product development specialist,” “product development manager,” and “product development lead.” Other individuals working in this field might include engineers, directors, researchers, marketing coordinators, scientists, and model makers.

With so many varying roles, it’s hard to narrow down the responsibilities of individuals involved in the process of product development, though some responsibilities might overlap. For example, a product development scientist might be required to innovate customer solutions while also taking part in market research and customer testing. A product development specialist might have similar duties or instead be responsible for creating new products from scratch and simultaneously determining the best ways to reduce production costs. Managers and directors are generally tasked with overseeing the development process; however, they might also be involved in hands-on responsibilities.

It’s common for businesses to want to hire in-house employees to manage their product development because it is often deemed a more reliable option. With a salaried employee, a company might also be able to get more bang for their buck. However, some companies opt to work with freelancers who bill for specific services, enabling the company to save money on benefits packages, unemployment insurance, and other expenditures associated with salaried employees.

So, if a company opts to work with freelancers, you might have greater leverage to name your price. Of course, it’s good to have a glowing portfolio and recommendations from previous projects to showcase your ability to effectively manage your portion of the product development process.

When deciding how to bill for your product development work, it’s good to consider the following methods:

• Fixed pricing: Under this method of billing, you determine before your project begins how much you would like to be paid. This can be tricky because it doesn’t account for unforeseen aspects of the process that could require more time and effort than originally estimated.
• Hourly billing: Billing on an hourly basis is generally considered the most common method. It gives you more space to work through and bill for the ever-changing aspects of product development.
• Sell a pre-developed product: If you already have a product in mind and have personally gone through the stages of development, you could consider selling your “design and build” model. This way, you already know how much the development process costs and can bill in a manner that produces a profit for your effort.
• Hybrid billing: Sometimes, freelancers feel better when able to mix their billing options. For instance, you might ask for an upfront fee to get started then charge an hourly rate afterward.

How you choose to bill is entirely up to you and should be determined by your work style and ability to produce the best results.

Creating a quality invoice is critical to ensuring you receive the pay you deserve as a product development freelancer. You can create your own invoice from scratch or download invoice templates from Indy that enable you to customize using your brand name and logo. Another great option is our invoice generator, which streamlines the invoice creation process for you.

No matter which option you choose, it’s good to know what components make up a good invoice for product development:

• Name and contact details: Your business or legal name and contact details (address, phone number and/or email address) are important for tax purposes and can ensure your client has no trouble contacting you with questions or concerns.
• Client name and contact information: You should also include on your invoice the name and contact details of your client so you can properly bill their business.
• Invoice number and dates: Each invoice has a unique number that allows you to track it individually and keep specific records for tax purposes. You can choose the number system you desire. Also, include on your invoice the date you plan to submit it to your client as well as payment due dates. Invoices often use “NET30” if payment is required in 30 days of invoice or “NET60” if desired in 60 days.
• Item list: Your invoice’s item list gives you the opportunity to detail each project you worked on, the dates you worked, and the flat rate or per-hour rate for the time you worked. It’s important to be as detailed as possible so your client is clear about the services they’re paying for.
• Logo: It’s a good idea to design (or hire a graphic designer to create) a logo that makes your business easier to identify and helps it stand out from your competition. This logo is usually placed at or near the top of the invoice.

When you’re ready to provide your invoices to your clients, you can send them via email or take advantage of online invoice tools from Indy that allow you to utilize online payment options like PayPal or even receive payment through Direct Deposit.

The amount you choose to bill for your product development work can depend on a variety of factors, including your years of experience in the field, ability to showcase projects you’ve worked on or hours dedicated to the craft, and recommendations from previous clients.

You might also be able to charge more if you have acquired extended education or certifications in your field like the New Product Development Professional (NPDP) certification from the Product Development and Management Association (PDMA). This certification demonstrates your competency in areas like market research, portfolio management, new product development strategy, and metrics.

Of course, the rate you bill for your services would also depend on your specific skill set. For instance, a design engineer might earn a range of $18 to $39 per hour whereas a product designer’s earnings can range from $16 to $51 per hour. Individuals who work as product engineers might earn within the range of $19 to $40 per hour. The range for research scientists is typically $17 to $47 per hour.

As mentioned previously, your level of expertise could impact the amount a client is willing to pay. For example, an entry-level research scientist who doesn’t yet have a year of experience might earn 6% less than the average rate, while someone who is in the middle of their careers is expected to earn 6% more. An entry-level product designer generally earns 16% less than the average, while an individual at the middle stage of their career could earn 7% more.

It’s good to keep in mind that these are national averages for various product development roles. The client you plan to work with might be located in an area where your competition generally charges less. This can be especially tricky if you work remotely and live in an area where your cost of living is higher than that of your client’s. You might want to bill based on your living and business costs, and this might be more expensive than your prospective client can handle.

When deciding your rate, also consider the company that you plan to work with. If your client is a small start-up, they might not have the same amount of money to pay for your services as a larger business that regularly develops successful products. If you’re working with a smaller company and have developed your own product, this might be a good time to consider selling under the “design and build” model. This way, your client would feel more confident that they’re getting a quality product, and you can set an upfront price that reflects your time and effort.

It’s not always easy to figure out as a freelancer how much to bill a client. Both parties might have ideas of what development should cost at your stage in the process. You might find that you’re asked to complete more tasks than expected for your rate, and it will be up to you to negotiate based on your skill set, availability, and the overall scope of the project.