Why Use External Agency for Product Development?

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Businesses have two main options when they decide to develop a product - they can either build an in-house team or hire a product development agency (although a mix of the two could also be an option depending on circumstances). Both options have their pros and cons. With this in mind, we will be as impartial as we can as we'll be discussing why a product development agency might be the right choice for you.

Don’t get us wrong, we absolutely see the benefits of having an in-house development team, however it comes down to the careful balancing act of speed to market versus cost and effort. For example, usually the success of a startup largely depends on its ability to get a product to the market quickly to test it amongst the target audience and if they have to set up an in-house team then it could take too long. At the same time a business that is developing an improved version of their product might have more time at hand or might already have a team set up.

Pros of hiring a Product Development Agency:

Saves time and has no hidden costs

When you are setting up an internal product development team, you will incur many costs - not only the monthly salary of the employees but also hidden expenses like equipment, software, taxes, holidays etc, as well as investment of your own time or HR department’s. For example, the initial hiring steps such as interviewing and screening take up the most time in the whole hiring process. If the candidate doesn’t take your offer, you might have to go through the process again unless you have another suitable candidate already waiting. You also need to think about the costs and time associated with the onboarding process to get them up and running.

However, when you use an agency for your product development needs, you will have no hidden costs - just the agreed fee. You will also save the time that setting up and training a team would take as the agency will give you an instant workforce and those product developers also already know their programmes.

Agencies provide flexibility

Product development agencies are also usually quite flexible and can react to the changing needs quicker. You can use them as a sole resource and scale their workload up or down or as an addition to your in-house team when you need to shorten timelines or get new viewpoints. With short-term projects for example, time is of the essence and therefore they normally require a quick start. It would be very tricky to either build from scratch or scale up an internal team all of a sudden so a product development company is the best solution in this case.


Using an external agency is also a very comfortable solution as you can delegate the project to an experienced external team, set a contact frequency that you feel comfortable with and free up your own time. They will be running the project and will raise any issues that might arise with potential solutions. You, as a project leader, simply check their work and make sure that the project goes according to plan. Another option is to use someone from the agency as a project manager who takes care of everything - the schedule, timeliness and other factors that will affect the project at hand. A convenient solution, right?


One of the most important benefits of a product development agency is their extensive knowledge and experience in the field of product development. They might have also worked with other businesses in the same industry - this experience could be a very valuable asset. If you have your own in-house team - brilliant! However, it does not necessarily mean that contact with an external agency is pointless - in product development it is important to look at the product or ideas from different points of view to come to the best solution and add more value to the product.

Good partner network

Some agencies, like us, have connections in supply chain, manufacturing and other areas and so can help you find partners for different stages of the product development process. For example, we have partners who specialize in aluminum extrusion, die-casting, plastics injection molding, sheet metal processing and so on. This can save you the hassle of searching and contacting hundreds or thousands of businesses. You can also expect these contacts to be reputable and deliver quality service within the timelines because a good product development agency wouldn’t suggest someone they don’t trust - it is their reputation on the line too.

A breath of fresh air

This one is often not thought about but bringing an external agency in as an addition to your in-house team could help bring "fresh air" into the business and your internal team. It is a touchy subject but we are going there - sometimes businesses that have been doing the same thing for a while, get stuck in the old ways. Or businesses that have their own machinery might limit their production options to just use that equipment. An external agency won't know the history of the business or what is normally done there and thus will look at everything with no bias or preference and might therefore suggest a completely different solution igniting innovation and inspiring the internal development team and stakeholders with new ideas as well. For example, sometimes it might be useful to go from using sheet metal to plastics but the business might have not considered due to the equipment they already have. This new viewpoint could end up saving a lot of money for the business and/or guarantee sustainability of the business.

Potential drawbacks of using an Agency:

But we did promise to stay unbiased so let’s discuss some of the potential pitfalls of working with an agency as well. Product development agencies are very different in size, processes and expertise areas and therefore some will suit your needs whilst others won't.

Pricing seems too cheap? Beware.

Some agencies might under-quote for the initial work in the hopes of building a longer term relationship. To be fair, it is very tricky to provide an accurate pricing upfront as you can never take into account every change or challenge that might arise once you start the project but the agencies should make their best guess and you need to think carefully about what you will get in a fixed price model exactly. Another option is to look for an agency that can provide flexibility when it comes to costing. This way you can have control over some features, timelines and costs. For example, you can agree to shorter timelines during which certain criteria needs to be met by the agency.

You won't have experts in-house

If you are a startup, you are most likely developing something that is unique, innovative and doesn’t exist yet. It makes total sense that you will want to have the expertise in your product or service internally overtime. We absolutely support this, it is natural that no one else has more expertise in your product solution than your business, it just comes back to the balance between speed and cost.

IPR Policies & non-disclosure agreement

Intellectual property rights (IPR) and non-disclosure agreement (NDA) are important not just for you, but for your investors as well. Make sure that any agency you work with has a clear and clean policy on IPR ownership that limits your risk and stakeholders are happy with. You also need to make sure that you have a solid NDA in place with the agency so that your innovations and products don’t leak out and aren’t copied by a competitor before you can even launch them.

Transparency could be an issue with some 

Using an agency shouldn’t mean that you don’t know who is working on your project or where it is at. The difficult truth about product development is that things usually don’t go exactly as expected. Transparency is critical to ensure the project is going as smoothly as possible and to make sure that all issues get resolved quickly avoiding delays in the project. In a perfect cooperation, transparency should go in both directions meaning that the agency has an open communication with you and is open to honest feedback - be it good, bad or ugly.

What happens if the project needs to be cancelled suddenly

No one wants to think about this scenario of course but let’s be honest, sometimes you might start a project and for one or another reason you might decide that it isn’t worth continuing past a certain point. Either someone already releases the exact same product whilst you are still working on developing it or the estimated cost versus value doesn’t make it worthwhile. Just make sure that the contract covers what happens in this situation as well - do you still have to pay the full project fee or are there any early exit fees you need to be aware of?

So is cooperating with a product development agency worth it?

It depends on your specific case obviously, but generally – yes! There are many product development agencies on the market that already have years of experience and proven skills. You can find real experts who can increase the value of your product with their amazing work.

Ready to hire a product design agency?

If you want to create products that people can’t live without, you need a great product development team on your side. Don’t have the know-how in-house? Not to worry, we can help you - we are experienced in supporting both mass production and smaller more technical projects. Get in touch and let’s develop your products together.


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