Cost of IoT Prototype Implementation in 2024

Wondering whether to include the cost of building an IoT prototype in your IoT product development budget? 

Imagine pouring your heart and soul, not to mention significant capital, into an IoT solution — only to discover it doesn’t resonate with your target audience or fails to perform intended functions! Even worse — you only at this point realize there’s a way to save time and refine your product vision before starting full-scale development.

Proof of Concept and prototyping are the the core IoT implementation steps, and can be the Time-Turner to reverse the course.

What else? 

Find the right partner for your IoT project who will help you test your ideas and develop an IoT proof of concept. 

With IoT prototyping costs typically starting at $6,000, you make a much smarter investment than jumping straight into full IoT product development.

If the client or the team hesitates about certain functions, solutions, or technologies in the project — the best way to solve them is to make an IoT prototype and test it. This will help detect early and minimize the chance of errors.

Kostiantyn Oliynyk, Head of IoT at WebbyLab

Kostiantyn Oliynyk

Head of IoT at Webbylab

Helped dozens of startups create effective IOT products.

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A prototype is an early-stage version of IoT devices that helps test and refine the final product’s functionality. 

But how much does it cost to build an IoT prototype?

In this article, WebbyLab provides a strategy for effective IoT prototype design & implementation based on our five real-life projects, including Propuskator, an analog intercom converter, and beyond. 

We’ll also cover:

• The main stages of IoT PoC & prototyping
• The core IoT prototype components
• The approximate cost of real IoT prototypes developed by Webbylab
• How to reduce a cost

The WebbyLab team is working on the IoT prototype implementation

The Specifics of Prototyping IoT Products

Unlike market-ready IoT solutions, the IoT prototype is a product that covers the basic features of an IoT solution. It helps to check the product’s hypothesis, gain client feedback, and analyze the specifics across all the stages of IoT development and potential issues and edge cases before, during, and after the implementation.

The core purposes of IoT prototype design include the following:

• Test the idea’s feasibility
• Find the best solutions
• Reject unsuitable ideas
• Identify technical challenges
• Estimate costs
• Understand user interactions with the product before moving to more advanced product development stages and mass production

Besides, with IoT prototyping, development teams and their clients assemble a detailed product requirements document, a checklist, and more. Considering those subtleties increases your understanding of the full-fledged product you aim to create. 

Also, it’s better to define the prototype’s goals, deadlines, and budget right away for a more straightforward IoT implementation strategy.

Prototyping devices in IoT is a complex process that covers multiple components, including the IoT product itself, firmware, and software solutions. You can also test IoT prototypes for compatibility with communication protocols, security tasks, and microcontroller characteristics to ensure comprehensive functionality.

Ultimately, you get a clearer grasp of the project roadmap, draw up a RACI matrix of responsibilities, and establish a budget and deadlines, following a well-crafted technical task. 

Through IoT prototyping, you gain a thorough understanding of the implementation process as well.

Before starting a project, it’s important to test its functionality by assembling a prototype that will immediately highlight non-obvious problems and difficulties. This way, it can become a convenient tool for testing new hypotheses or ideas for your product development.

Yehor Fedorov, IoT Project Team Lead at WebbyLab

When compared to the market-ready IoT devices, the IoT proof of concept also has the following differences:

• It doesn’t have to be ready for production. The key goal of an IoT product is to bring a general understanding of the target product: budget, relevancy, tech stack, etc. Based on the IoT prototype analysis, engineers will create the most efficient development strategy that fits the project’s objectives.
• It requires creating custom components. Developers must fuse many elements to ensure smooth performance within a single IoT ecosystem. It sometimes requires embedding the add-on custom components (microchips, program solutions, etc.) to make it work properly.
• It executes the most complicated tasks. An IoT prototype enables practical testing of complex features and processes. Thus, you will ensure their feasibility in a full-fledged solution.
• It has a variable cost of production. Depending on the IoT project’s scalability (hundreds of devices or billions of ready-to-market products), IoT prototyping helps to wisely allocate the budget for the entire project and define the possible ways for cost optimization.
• It’s not always a mandatory stage of IoT development. If you have a well-thought-out technical task and your engineering team knows exactly how to achieve the set result, you may skip prototyping. However, even in such cases, components like the RACI matrix, roadmap, and estimation remain crucial.

Anatomy of an IoT Prototype

Understanding the development anatomy is simply a must to build your IoT prototype. It helps comprehend its essential components and develop the best strategy for the upcoming IoT project. 

Every IoT prototype consists of the following essentials:

• Hardware — all the components that make up your device. It’s important to cover the regulators, standards, and laws depending on the target industry and market focus on harmonizing the prototype and IoT solution.
• Firmware — programs on your device performing particular functions. It also includes the required code to manage communication protocols and data processing. Thus, firmware ensures the seamless operation of an IoT solution.
• Software — for management, monitoring, and analysis of the IoT prototype and data it collects. We recommend using ready-made software. In particular, many open-source and paid platforms are already available for standard protocols and tasks. For example, WebbyLab’s 2Smart project offers a pre-built backend, web, and mobile application for testing any device communicating via MQTT.

However, the software isn’t always integral to IoT prototyping. You may skip this part when working on your prototype by checking the device in headless mode or making a built-in interface (like the device’s web admin).

Ideally, an IoT prototype should be made so that all the deliverables, including firmware, printed circuit boards, software, design, etc., could be used at the next stages. Otherwise, it may indicate that the goals of the prototype weren’t set correctly.

Kostiantyn Oliynyk, Head of IoT at WebbyLab

5 Main Stages of Developing an IoT Prototype

WebbyLab experts are creating a prototype of a security robot

To clarify how to build an IoT prototype and how much an IoT POC implementation will cost, let’s analyze this process in detail

Discover the cost of IoT prototype implementation and stages of IoT prototyping

1. Collecting the Requirements & Understanding Goals

Regardless of your project, the standard prototyping process starts with shaping the requirements and expectations of a custom IoT prototype. It defines what product you need and what conditions or certifications to focus on.

Gathering requirements and determining goals is one of the crucial IoT implementation steps and a foundational stage for the entire project. This process usually involves a business analyst or technical specialist who works with the client on the following tasks:

• First, they discuss the general idea with possible, desirable, and acceptable solutions. This way, specialists build the concept of the entire product.
• From the created concept, they highlight the main tasks that need verification or are unclear and challenging.
• Finally, they develop a detailed requirements description of the entire project. It focuses on the must-have tasks and a brief explanation of the rest. This description also includes the tasks set for the IoT prototype stage with the budget and implementation timeline.

This stage also involves the following steps:

• Conducting thorough market research
• Studying competitors and their solutions
• Collecting feedback from the user
• Ensuring its usability and relevance
• Checking some technology or a mix of technologies
• Understanding whether there is enough expertise to complete this project, and more

The cost of the IoT PoC research stage depends on how many aspects should be covered and typically starts at $500.

2. Selecting the Right Hardware

Next, it’s essential to pick up the proper hardware that will better fit our prototyping IoT project, which usually depends on its type and objectives. Thus, first of all, we create IoT PoC (Proof of Concept), which is based on ready-made hardware solutions and aimed at checking the product hypothesis, to ensure it’s relevant and valuable at the time of release and afterward.

At this stage, it’s a good idea to evaluate multiple solutions and select the optimal one considering the cost and quality for the intended tasks. Verifying firmware compatibility with the chosen hardware is also crucial. We suggest using as many pre-built solutions as possible instead of creating custom prototypes by soldering or assembling them on a breadboard. That’s because you can replicate them on a custom board during hardware development.

Based on the project type, you’ll choose a certain set of prototyping IoT sensors and devices that will help to perform the desired features.

Typically, the overall cost of an IoT PoC development stage is about $1000.

3. Choosing the Proper Tech Stack

At this stage, you should test and choose technologies, protocols, libraries, and methods for writing firmware to solve specific tasks. Those should be the tools you can later use in a full-fledged product.

The cost of this IoT prototyping stage can vary significantly, ranging from zero to approximately $1500. 

If the team has prior experience and doesn’t need to choose the technology stack from scratch, this step can be skipped or cost very little. Yet, in cases where extensive testing of alternatives is required, the price can be higher. Ultimately, it depends on the project’s and device’s specifics.

4. Development & Testing

Similar to other projects, prototyping IoT starts with choosing the development model (agile, for example), and setting up the deadlines for each development phase based on its complexity and possible challenges. This helps ensure the rapid building of IoT prototypes and solutions with minimum time and maximum efficiency.

Also, it’s essentially important to create a QA testing strategy to identify the possible bugs, as well as clear out the risks and challenges that can come out during the IoT project development.

How much does an IoT prototype cost? This stage of prototyping is extremely volatile, starting at $3000 on average.

5. Analysis & Drawing Conclusions

It’s absolutely necessary to draw insightful conclusions upon prototype execution.

Start by documenting the results and verifying if all performance goals are met. During the analysis, consider the project’s economic aspect, assessing whether the invested funds can be recouped within a reasonable timeframe. Analyze the technical component and be open to adjusting the development strategy by engaging other experts or giving up certain functions. Determine whether the product can surpass competitors, even with limited resources.

The fastest method to validate a product is to show the prototype to experts. This is the cheapest way to get feedback on the market.

Kostiantyn Oliynyk, Head of IoT at WebbyLab

Answers to all these questions can be sought through PoC. While not guaranteed, a few months and a significantly smaller budget than the MVP can help you mitigate risks.

WebbyLab Experience in IoT Prototype Development: 5 Examples

In this section, we’ll provide some illustrative examples to better comprehend all five stages of IoT prototype design. Let’s look at several project examples delivered by WebbyLab experts.

2Smart Lamp

The led strip controller that became the cornerstone of the smart lamp IoT prototype developed by the WebbyLab team

When working on a smart lamp prototype, our team went through the following steps: 

1. Initially, we set goals for the prototype stage and conducted a market analysis. We realized that we aimed to develop a lamp that can be controlled through a mobile application, available either as a ready-made version or as a kit.
2. We determined the essential components for the device: the basic elements for controlling the LED strip and ESP32. The choice of the ESP32 dev board was deliberate to enable users to replicate the project on their own easily.
3. Our team chose the Arduino IDE stack for firmware because our goal was to create an open-source project. For the software part, we selected our 2Smart platform.
4. We developed the basic firmware and the device on the dev board, integrating it with 2Smart Cloud. Our main challenge was to design a suitable architecture and implement impressive effects on the LED matrix.
5. We analyzed the results of our work and derived the following insights:

• • We needed to design a printed circuit board for easy mounting of the ESP32 and basic elements.
  • We needed to add a separate power port for stability, avoiding the regular dev board port.
  • We determined the peculiarities of working with the touch button for switching modes.
  • We defined the primary functionality of the firmware and confirmed our ability to develop it.
  • We determined the manufacturing cost of the device and kit, along with understanding the required work to finalize the firmware.

Ultimately, we brought the project into production, initiating small-batch manufacturing and successfully selling the first 100 devices. This marked a complete cycle for our business, made possible by the completed prototype stage.

The prototype cost us up to $3,000, given that we had extensive experience with similar devices.

Analog Intercom Converter

The IoT prototype of the analog intercom converter created by WebbyLab

WebbyLab successfully prototyped a device that converted analog intercom signals into digital formats, enabling the reception of calls from digital intercoms and mobile applications.

Here are the steps we took to create this solution:

1. We examined converters with similar functions and identified key tasks our solution had to perform. We analyzed both existing converters and ready-made digital/analog intercoms to understand their features better.
2. Opting for a robust MCU, we chose Orange PI and Raspberry PI as the prototype’s foundation. We used a ready-made converter to read the signal and simple solid-state relays to control the analog intercom.
3. For firmware development, our team used Node.js, a technology easily executable on the chosen controllers. We leveraged the AsTeRICS open-source solution for intercom functionality to ensure communication between SIP clients.
4. WebbyLab developed the test firmware, set up the AsTeRICS server, and configured SIP clients. We used existing mobile apps with SIP intercom support for the software part. As a result, our experts created a prototype that enabled calls from the intercom, with the converter’s PoC connecting through AsTeRICS to the mobile application. Post-call, the converter signaled the intercom to open the door.
5. Having conducted a thorough analysis, we identified the main challenges for the subsequent MVP launch:
   • We needed a complex controller with many technical nuances.
   • We required open-source software for server-side intercom configuration.
   • Our team had to find an SIP phone implementation under React Native.
   • We established the estimated production cost and a roadmap of works.
   • Recognizing the difficulty in competing with analogs, we outlined our unique selling proposition — integration into the access control system Propuskator.

Upon completing the prototype, WebbyLab developed a device capable of launching the software solution. However, due to business reasons, the project wasn’t fully developed.

The approximate cost of such an IoT prototype was up to $15,000.

Security Robot

The prototype of a security robot by WebbyLab

We initiated our security robot project with prototype development. Our main goals were to transition device management to the cloud, incorporate camera functionality, and identify key challenges.

Here are the steps we took to create this solution:

1. We analyzed similar devices and their technologies, preparing a technical task for the prototype.
2. Hardware selection involved experimenting with low-power ESP32 modules (ESP32 CAM version) with a camera, Raspberry PI, and Orange PI microcontrollers. We used LEGO constructors that already had engines and all the components for movement and camera rotation, eventually discovering a ready-made base for the surveillance robot in a self-assembly kit.
3. In terms of software, we leveraged the 2Smart Cloud platform with modifications, including a video stream viewing widget, a joystick widget, and a separate service for video processing.
4. Firmware development involved using the Espressif IDF stack for ESP32 and Node.js for Raspberry PI and Orange PI, executed in a Docker environment.
5. After the prototype stage, we formulated the final technical task, solidified hardware choices, and recognized that our primary challenge was working with video.

The approximate cost of such an IoT prototype reached up to $20,000, primarily due to extensive software development work.

NDA Project for A/C Systems Cleaning

The IoT prototype of an A/C cleaning solution developed by WebbyLab

As part of our commercial project on A/C drain line cleaning, we developed a prototype, beginning with top-level requirements from our client. After conducting a competitor analysis, we worked out usage scenarios and created the technical task for the software. Simultaneously, our experts designed the application and prototyped the device.

For the prototyping process, WebbyLab handled the following tasks:

1. We analyzed suitable modules, compared them, and recommended the best option based on our assessment. We aimed to ensure the device boasted a long battery life, multiple triggers for exiting energy-saving mode, and a Wi-Fi module for cloud connectivity.
2. Our experts suggested using an ESP32 version due to its robust performance, power-saving capabilities, and a sufficient number of pins for connecting all the necessary peripherals. The project’s peculiarity was that the peripherals had already been determined. That’s why, upon choosing the controller, we proceeded to prototyping, namely assembling the test device and creating the firmware.
3. The created prototype fulfilled basic functions, facilitated consumption measurements, and tested key technical hypotheses. Leveraging the ready-made 2Smart Cloud platform, we interfaced with the device via MQTT in real-time, minimizing the need for software development.
4. Firmware development was based on Espressif IDE, laying the groundwork for the main device’s firmware. Additionally, a printed circuit board was developed as part of the proof of concept, confirming all results.
5. The prototype made it possible to identify the main PCB needs and think through the complete algorithm of the device’s work. The PoC stage results were transferred to the hardware development team as a basis for recommendations, informing subsequent device development stages.

The estimated cost of such an IoT prototype is up to $2,000.

Propuskator

Circuit boards tested/made by WebbyLab, including Propuskator

When working on Propuskator, our access control system, our team developed a prototype to test our solution. Our primary goal was to create a functional device for controlling electric locks from a mobile application.

For the prototype, we selected the ESP32 Wi-Fi module, designed a printed circuit board, and produced several initial devices. Within the prototype scope, various features were incorporated, including integration with the exit button, reader, and opening sensors, though they were not the primary focus.

Firmware development was executed based on Espressif IDF, integrated with a zero software version of the ACS system, Propuskator. The prototyping phase allowed us to identify main improvements, with the printed circuit board serving as the foundation for subsequent developments.

How to Calculate the Total Cost of an IoT Prototype Solution?

From Webbylab real experience, the IoT prototype cost is about $6,000. It comprises of the following stages:

However, the Internet of Things prototype cost may differ significantly, so you should calculate it correctly. Here’s what to consider:

1. Hardware costs. First, estimate the budget for all the hardware components required for the prototype, including sensors, microcontrollers, etc.
2. Firmware and software costs. Consider development costs and the licensing fees for ready-made software. Also, calculate expenses associated with cloud services, data storage, and third-party software integrations.
3. Manufacturing costs. Estimate the expenses of manufacturing the prototype.
4. Testing costs. Calculate the costs for IoT prototype testing.
5. Overhead costs. Remember to consider any expenses that might be above your budget.

Unfortunately, there’s no fixed answer to the question “How much does Internet of Things cost” — everything depends on multiple factors:

• Prototype’s complexity (consider features, integration of hardware and software components, etc.)
• Hardware components (sensors, controllers, communication modules, etc., also impact the cost)
• Software development (it may impact your cost if you choose custom development or buy ready-made solutions on the market)
• Design and documentation (take into account the prototype’s design decisions, technical documentation, and compliance with industry standards)
• Expertise and resources (consider expenses of hiring the required talent)

The above parameters impact the costs to develop an IoT prototype design. Therefore, you should keep them in mind before initiating your project.

Why Should You Prototype Your IoT Device?

Starting your IoT project from its prototyping is not an option, but rather a necessity, and not solely in terms of time and cost efficiency. The other benefits of prototyping IoT solutions are described as follows:

• Brings clarity to the IoT product design and user experience
• Gives you important information regarding the use cases
• Provides you with early feedback from users and your team
• Allows using ready-made open-source and custom solutions
• Mitigates risk and allows to understand the potential problems

With this said, prototyping opens up new ways to design IoT solutions in a smart way. With the right vendor on board, you can ensure to test the ideas efficiently and develop the right strategy for your upcoming IoT project development on average starts at $6000 and higher. 

To get a more accurate estimation of your project, in particular, we suggest contacting our experts.

How to Reduce IoT Prototype Development Costs

Suppose you’ve considered all IoT prototyping requirements and aren’t pleased with the cost of building an IoT prototype. If that is the case — no worries. Use the following tips to lower your project expenses.

• Increase your awareness in the IoT field, understanding of your goals, and ways to achieve them
• Choose experienced IoT vendors
• Stick to the recommended project flow
• Avoid custom development of too many tasks and features
• Choose ready-made open-source or paid solutions at the prototype stage
• Assemble a device prototype without production, in small batches, and from ready-made components (using 3D printing as an option)
• Skip tasks that won’t bring sufficient business value
• Focus on the competitors’ solutions, considering their successful decisions and mistakes

Leveraging these tips will help you save some money and spend it on more critical procedures of your IoT project.

Conclusion

As you can see, creating an IoT prototype is one of the most essential aspects of IoT development, regardless of the project’s specifics, target industry, and scale. Though it requires lots of effort, planning, and expertise, it truly helps to understand the project characteristics, covering the major challenges with hardware and software, as well as the relevancy of features included. As a result, you’ll be able to define the most efficient development model that ideally fits your business goals and budgeting, reducing all the risks and forecasting the project’s performance.

Are you looking for a dedicated development team to launch a custom IoT project? Request a consultation today and discover how to make the most of your IoT business idea with WebbyLab’s best IoT experts!