How to Choose a Product Development Company

Dayana Mayfield

Agile Product Development

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A product development company will act as your partner in the complicated process of developing a brand new product. The team should help with strategy, market research, product testing and validation, and building new iterations until the product is perfect. 

Product development looks very different for SaaS companies than it does for consumer goods or B2B manufacturing brands. 

In this guide, we delve into the ins and outs of how to choose the right product development company regardless of what you’re building. 

Plus, we offer some special insights into the process for software companies specifically. 

What’s in this guide:

  • What are the different types of product development companies?

  • Product development motivations

  • What do product development companies do?

  • What are common product development services?

  • What to look for in a software product development company

  • Steps in DevSquad’s Sprint Zero process

What are the different types of product development companies?

When you think about the word “product,” what comes to mind? Do you think of business software or a kitchen gadget? 

Here are the main types of product development, based on the types of products themselves:

1. B2B software product development 

A product development company that specializes in B2B software will typically offer UX design and software development services. But before actual development should take place, the company should offer a validation sprint that includes prototyping, testing, and backlog creation. 

In the software world, products can be simple tools like a UTM tracker or big, massive platforms like a marketing automation suite. That’s why MVP creation is the focus for initial engagements. 

Example: DevSquad

a product development company

DevSquad is a product development agency for new SaaS entrepreneurs and established B2B SaaS brands looking to create a brand new product. Our core competencies include our Sprint Zero prototyping and validation process and our monthly development services (engineering, UX design, DevOps, QA, and business strategy).

Learn more about building a software product with DevSquad.

2. Consumer tech product development 

There are so many different categories within consumer tech. There are wearable devices that increase connectivity, like smartwatches and fitness trackers. Then there are wearable devices for safety, such as location trackers for children with autism or emergency alerts for young women. This list goes on. If you want to create tech for consumers, you’ll need to hire a product development firm that specializes in both B2C markets and technology. The firm might also be able to help you develop a mobile app or watch app. 

Example: Design 1st

Design 1st is a product development company that specializes in consumer tech and software. They offer prototyping, manufacturing support, and marketing services.

3. Hardware product design 

Another type of product development is hardware product design. This could include IoT development as well. You might create hardware to sell to larger consumer tech companies or to manufacturing companies. 

Example: Very

Very is a product development firm that specializes in hardware and IoT. Because so many devices are now smart and connected to the web, hardware manufacturing requires more IoT knowledge than ever before. 

4. Consumer physical product development 

And then there are physical products for consumers that are not tech-related or connected devices. For example, beauty products, accessories, kitchen appliances, and pet products would all fall within this category. Consumer product development teams need a strong background in market research, prototyping, and manufacturing cost control to be successful. 

Example: Enhance Innovations

Enhance Innovations develops consumer products across multiple categories, from hair care to cleaning products. 

5. B2B physical product development 

Consumers aren’t the only ones who purchase physical products. Companies need various products too. For example, construction workers need equipment and dentists need dental tools. Many product development agencies work within just a few industries or fields because specialization offers deeper insights into what skilled professionals expect out of certain products. 

Example: LA New Product Development Team

The LA New Product Development Team creates products for machinery and other B2B companies. 

Product development motivations

Why develop new products? The reasons for forging into new territory usually comes down to one of these:

  • New to the market - Your company might be developing a brand new product that doesn’t exist in the market. 

  • New to the company - Your company might want to develop a product that is similar to competitor offerings in order to retain customers.

  • Improvement of an existing product - It might be time to improve an existing product with new features or other enhancements. 

  • Expansion of product line - Maybe your company is adding a new product to an existing product line, and it needs to fit in with other offerings seamlessly. 

What do product development companies do?

Product development companies offer a wide range of services depending on the type of product being developed. For example, software companies might offer prototyping, software development, and DevOps launch services. While consumer product companies might offer market research and prototyping and refer actual product creation out to their manufacturing partners. 

What are common product development services?

Product development companies typically provide a few of the following services to their clients. The services can be done-with-you, meaning the client’s team also gets their hands dirty, or fully done-for-you, meaning the client provides strategy insights, direction, and feedback but doesn’t do any implementation work. 

1. Market research

Market research is such an important step that many companies only offer this service to their clients. Market research can take the form of focus groups, interviews, user testing of the client’s or a competitor’s products, and surveys. Fast-moving consumer goods can even run auctions to see what toothpaste or shampoo product variations consumers would actually buy with their own money. Veylinx is one of the top firms for running market research auctions.

2. Product prototyping

Product prototyping is another common service. For software development companies, this might be a high fidelity prototype with UX very similar to what the finished product would be, albeit without the backend development complete. This allows users to click around the product as if it were fully functioning in order to provide feedback.

But when it comes to consumer goods, product prototyping can be 3D printing or actual small-unit orders from manufacturers. 

At DevSquad, we offer product prototyping for feedback and validation before we dive into actual software development. 

3. Prototype testing

Not all product development companies offer product testing. This might be an optional, add-on service. Clients can save money by testing and collecting feedback on a prototype by themselves. Or, they can hire the firm to test the product for them. For software, this would entail finding ideal users and asking their feedback on the necessity of the product, its usability, the importance of the features, and whether any key feature is missing. For consumer goods, the product needs to not only be usable but also branded in a unique way to stand out in the market, so testing might center more on collecting feedback about the emotional impression that the product makes, and not just its usability. But of course, that depends on the product category. When it comes to tools, functionality is everything. 

4. Product development sprint process

Many product development companies offer a sprint process that combines multiple services into one service agreement. For example, at DevSquad our Sprint Zero process includes a strategy workshop, low fidelity prototype, feedback, high fidelity prototype, and backlog creation. User testing is also available as an add-on for clients that don’t want to run user testing themselves. 

5. Product building

Some product development companies will offer to actually build the product after the prototype is available. A consumer goods company might have their own manufacturing facility or might whitelabel the services of a manufacturing partner. Meanwhile, software development agencies will typically offer to build a product once the prototype has been validated. Just make sure to hire a SaaS development agency that offers prototyping services first if it’s a brand new product. The easiest way to waste money is to go straight to development without prototyping and validation. 

6. Launch support

Companies might also offer launch support. For tech companies, this could involve deploying the software to AWS or bare-metal cloud servers and other DevOps services. For consumer products, launch support might include sourcing packaging, creating listings on Amazon and other marketplaces, developing a Shopify store, and possibly paid advertising services.

7. Referrals and guidance

When you hire a product development company, you’re not looking for a firm that’s going to hand over a prototype and call it a day. You want a strategic partner with more experience and connections than you. The company should have partnerships with other firms that can augment their services. For example, they should be able to refer you to a manufacturer or a marketing agency as needed. Referrals are typically free, but the company might also have a retainer service for ongoing strategic support. 

What to look for in a software product development company

Until now, we’ve covered product development a bit more generally and have dove into various industries and categories. 

Now, let’s take a look at the specific things to look for when you’re hiring a company to help build your SaaS product. 

1. Focus on products over projects

A company that builds “projects” is usually more than happy to add on whatever features you ask for. Before you know it, the estimated cost of building the first iteration is $500,000 or more. 

Instead, look for a company that has a true focus on building products. They should understand MVP strategy and be able to create your MVP for under $100,000. The difference lies in understanding the business case for a product and developing only what’s needed to get the first paying customers in the door. All other features can be built after the initial revenue and customer feedback. 

2. Experience running sprints

The company you choose should also have experience running sprints. At DevSquad, we call our process Sprint Zero (scroll to the bottom of this post for more details). 

While there are software development companies that specialize in MVP creation, very few know how to run prototyping and validation sprints. It’s a unique skill set. 

3. Business strategy

When you’re vetting your development team, you should be able to tell whether or not they bring business strategy to the table. Do they ask insightful questions? Do they push back on your ideas? Are they knowledgeable about your business model, and do they see a better way to structure revenue acquisition? 

This point is related to the first two, but it’s worth mentioning on its own. The company should be strategists, not just developers. 

4. Backlog based on validated prototype

When it comes to software development, many agencies will move straight into backlog creation. They’ll run several kickoff calls with you, listen to your desired list of features, and add them directly to the backlog. 

Instead, the agency you choose should only build a backlog based on a validated prototype. Whether they’ve helped you build and test the prototype or the prototype was created by another agency, they should check that you’ve done the validation work. Otherwise, this shows that the company is happy to take your money, despite the fact that the market might not actually need your product. 

5. Fully managed development

The company you choose should also offer fully managed development. This way, once the prototype has been validated, you can build the product with the same team, with no need to manage different players on your own. 

6. Includes DevOps and launch support

Within that fully managed team, the company should offer DevOps and launch support so you don’t have to deploy code yourself. This not only leads to SaaS products that have more uptime and better performance, but it’s also less stressful for you. 

7. Offers ongoing QA

The SaaS product development company should also include ongoing QA services. Many software developers will leave QA up to you, meaning you need to crowdsource this service with low-skilled, entry-level testers. Instead, work with a company that employs expert testers who work on quality assurance continuously. 

8. Continual backlog grooming

You don’t want “yes men” during the prototyping phase, but you also don’t want this in later phases either. Just like feature bloat can kill an MVP from ever making it to market, feature overwhelm can also prove dangerous for more established products as well. Too many of the wrong features can worsen UX, confuse your customers, and ruin your profit margins. Make sure that the company uses a keen, strategic eye to groom your backlog on an ongoing basis, and that they continue to push back on unnecessary ideas, instead of saying “yes” to developing anything under the sun. 

Steps in DevSquad’s Sprint Zero process

Any product development company should have its own ironed-out process designed to take clients from idea to validated product and then launch. 

Here’s how DevSquad approaches SaaS product development:

1. In-person or virtual workshop

First, we run a two-day workshop. It can be in-person at our Salt Lake City offices or remote. During this workshop, we walk through the needs for the product, the problems that the target user is experiencing, and the top features that can solve these problems. 

2. Story mapping

As part of the workshop, we also offer story mapping. This is when we visually look at the possible solutions to fix the target users’ problems, discuss the pros and cons of each solution, and ultimately pick the best solution to develop further. 

3. Low fidelity prototyping

Next, we create a low fidelity prototype based on our discussions and best ideas. This might be a series of images that approximate what the UX will look like, but aren’t clickable or usable in any way. 

4. Feedback

We deliver the low fidelity prototype to you for feedback. If you know lots of target users, you can present it to them for feedback and discover if all critical features are included in the MVP. We can also help with user testing as an add-on service if needed, meaning we will collect feedback from target users on your behalf. 

5. High fidelity prototyping

Next, we take all of the feedback from you, your team, and your target users and turn it into a high fidelity prototype. Our UX designers create something that looks and feels like the launch version of your MVP, but without a functioning back end. 

6. Backlog creation

Once you’ve approved the high fidelity prototype, we generate the backlog that would be required to build it. We run on a monthly subscription model, so we quote your product development cost based on the estimated number of months required to get to the MPV. 

To create a high quality product, you need to partner with a company that has a proven process and all of the right resources. 

Make sure to vet your potential partner for not only initial product development, but ongoing support and strategy.

Building a SaaS product? Learn more about DevSquad.

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