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Test, refine, repeat: Why you need a prototype.

Get Crucial Feedback During The Product Development Process.

If you’re familiar with the Product Development Process, you’ll understand the term “prototype” and how important prototyping is throughout the entire design process. From the first proof-of-concept, right through to pre-production, prototypes that look and perform exactly like the final product help to refine and perfect the final product. This avoids costly pitfalls and saves time and money in the long run. When creating new products, prototypes are an essential step in evaluating design performance and function.

What Do We Mean By Prototype?

A prototype is an early version of a (usually new) product or its sub-components, made for the purpose of gaining insights into the merit of a proposed design. Unlike final production, prototypes are made in low volumes. They can be put together quickly with low-cost materials, or produced from CAD files using high tech additive and subtractive manufacturing processes such as 3D printing and CNC milling. 

The time and effort your company spends in the fit-form-function stage (including programming, engineering, and producing the soft tools or 3D print) to build your prototype often qualifies for R&D Tax offsets. 

So, what are the actual Proof-Of-Concept (PoC) steps you should be documenting?

Generally speaking, proof-of-concept processes will involve the following activities:

  • Examining the operational/performance requirements of a product
  • Identifying potential safety and environmental hazards
  • Preliminary production and manufacturing assessments

For manufacturing, specifically, some of the most common PoC steps include:

  • Prototype creation and testing
  • Component integration
  • Laboratory testing
  • Product optimisation
  • Design changes
  • Integration

These certainly aren’t the only PoC activities that qualify for the R&D Tax Incentive. So, it’s important to have a solid evaluation to identify which specific activities may earn you valuable R&D Tax offsets.

Which Activities Qualify?

There are a few simple ways to tell if your proof-of-concept steps qualify for R&D Tax offsets.

Qualified activities include new/unique processes that can be accurately repeated, along with documentation of modifications made to the original process. Unqualified activities would include any manufacturing of existing products with no design or revision changes. The latter is often referred to as ‘business-as-usual’ activities.

By documenting the stages or steps of your proof-of-concept, you can leverage your existing processes to add value to your business and create new growth opportunities.

Whether you need full R&D Tax support or just some general R&D Tax advice, contact us to see how we can help. Our expert R&D Tax team based in Melbourne is ready to partner with you and help you bring your ideas to reality. We offer an R&D Tax review  – a guided conversation about your company’s eligibility, R&D and non-R&D activities, contractual, technical and experimental documentation review. Book here.

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