I recently got into making hardware to be used by people with medical issues. Specifically, I made a handheld physiotherapy game console.

That’s a simple device using off-the-shelf components and a 3D printed shell.

Parts alone cost around €60 if I buy them off Aliexpress and around €100 if I go for more reliable industrial sources.

Assembly (some hand soldering required), flashing the software, testing, packaging and shipping takes about two hours. I don’t have any employees, so if I do this at the rate I get paid at my day job, that’s another €150. If I had employees, it would be similar due to tax and insurance costs.

Now I have a device for €250 plus shipping, but the calculation isn’t done here.

I also have to account for DOA parts, support (in my country there’s 2 years of warranty on electronics like that), returns (we have a 2 week free return law in my country) and a reserve for potential claims if something catastrophic happens (e.g. a battery blowing up and burning down a customer’s house).

So that easily doubles the price to €500.

But we are not done yet. First we need to account for R&D. So far I spent around 200h developing the device and the games for it, so that’s €15 000 in dev costs, and development is not nearly finished. I expect this to easily double.

Then come certifications. I will need CE including the radio part, certification for that will cost €10k-20k and that is if I don’t need to make changes. If the base board that I am using turns out to not be CE compliant, I will have to DIY a whole PCB design that passes CE and do the certification again.

If I want to have any chance of getting this paid for by an insurance company, I need medical certification. I spoke to a large manufacturer of medical devices (I wanted them to take over my project, but they declined), and they said that medical certification for a device like this is around €500 000.

I expect to maybe sell a few hundred devices per year if I am lucky, and I don’t know how long the market for this device would work. Let’s go with a four-year period until I want to at least break even, because anything longer than that would be very risky.

So let’s go with an unrealistic best case of 1000 devices per year, so 4000 total.

That means, the one-time costs would factor in at least €150 per device. If I only sell 100 devices per year (more realistic estimate) I would need to add €1500 per device.

Btw, medical certification only means there is a chance that insurances pay for it. It doesn’t mean they actually will pay for it. So if I’m unlucky, I paid half a million for the certification and the insurances won’t care.

So now we are up to €650 - €2000 for a device that’s €50 in off-the-shelf hardware. And I haven’t made any money from it apart from the salary for assembling it in my bedroom. And on top of that I also need to pay for taxes and stuff.

This is super frustrating. A handful of kids are already using that device, and every single family of them reports that it made their lives much, much easier, their therapy efficiency much better and improved the health of the children.

I even opensourced the design, to maybe give kids access to this device, but so far nobody dared reproducing it.

I don’t know how to spread that device in a manner that people can afford.

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Back to OP: the device in question is developed by a real company, having to pay for patents (both they want to hold and the ones they need to license), salaries, taxes, insurances, and so on, and it’s a really custom device with very custom parts. The price is neither unrealistic or crazy at all. It’s, in fact, really low for what it is.

The fact that we can get amazing high tech products like smartphones for a few €100 is totally crazy and only possible because millions of them are produced (economy of scale) and they are produced by exploiting foreign super cheap labour at every stage of the process.