Learn how to make a good product requirements document (PRD) for your hardware and IoT product. Shape an idea into a successful requirements document.

Defining a product is about specifying its technical and feature-related aspects that are crucial in product development life cycle. Having well defined, specified, and documented requirements will save a significant amount of time and money in the development and prototyping phase. More importantly, it will help you prioritize features and let you consider your hardware or IoT product from several perspectives, which will certainly result in the creation of a better product.

Think of this article as a 'how-to' tutorial for hardware or IoT product development, where we explain the real meaning behind PRD and provide key steps to take.

0. Make your market research and validate your product idea with potential customers

Although the topic is slightly different, we still want to make 3 points to emphasize the importance of validating your idea before outlining product design specification:

  1. Share your ideas with potential customers and listen to their feedback and suggestions.
  2. Know your competitors! And if you think you do not have any – which is extremely rare – search for product alternatives on the market!
  3. Draw up a LEAN business model canvas.You'll be able to consider your product from a variety of commercial and marketing perspectives, which is essential for further engineering and specification development.
Lean business model canvas
Lean business model canvas adopted from Osterwalder, Pigneur & al. 2010 (source)

1. Be clear on the purpose and functions of your product

Solve a customer’s problem with the help of your product.

“How do I help a Customer with my product” might elicit a string of concepts that define the functioning of your product. The purpose translates to certain functions your device should have.

It is generally easier to grasp the purpose and functions of B2B hardware products. These are intended to address a specific business issue, eliminate a particular problem, cut costs down or speed up a business process.

In B2C product development, it is a bit harder to formulate the purpose/problem as it is generally related to a specific feature or parameter that distinguishes your item and encourages customers to pay for your goods.

Typical hardware and IoT product development life cycle

2. Describe users of your product

Once you’ve finished with outlining your new product’s purpose, step up to describing your product’s user.

Certainly, users can be of various types. One and the same hardware product can be intended for both an end-user and a service engineer or a technician, a hospital patient and a nurse. Some users may only use the hardware component of your product, while others will only have access to the software.

By having a solid understanding of your product’s target users, you may create and develop a product that meets their unique wants and preferences. Having identified their characteristics, behaviors, and pain points, you can tailor your product features, functionality, and user experience accordingly. This enhances the likelihood of developing a product which resonates with and benefits your users.

3. Define use-cases

Once users have been identified, go on to discovering use cases, which are the basis for all design types, including industrial, mechanical, and electronic. Use-case documentation and description could seem tedious. However, as you get farther along in the process of developing a new product, you will be forced to either write it down yourself or employ a costly professional design consultancy to do so.

Of course, one can skip the stage, but doing so will inevitably lead to misunderstandings between your team and designers. The consequences will entail an increased number of design concepts and prototyping iterations, feature creep, which, in turn, will impose requirements creep, scope creep, and ultimately budget creep.

4. Define user scenarios

User scenarios can be used to further define enlisted users and use-cases. These are quite helpful when building product logic and algorithms because they assist in situating the product in the appropriate environment and provide you the chance to identify the key user-specific qualities associated with your concept, invention, or product.

User scenario illustrated

The product definition now divides into three main parts:

  1. Specifying hardware requirements–electronics, electrical, and mechanical requirements–in your own way, or in a Product Requirements Document format.
  2. Specifying software requirements, typically referred to as SRS (Software Requirements Specification).
  3. As your product development draws to a close, you will need to think of specifying:

          a) packaging requirements;

           b) and CMF (Colors, Materials, and Finish), which includes a list of necessary materials, colors, and coatings.

The points below focus on hardware requirements specifications. Although at EnCata we provide end-to-end services for both hardware and software, we generally suggest keeping the PRD/HRS, SRS, and packaging and CMF requirements separate, because each of these development tracks typically employs a different team.

5. List the features of your hardware product

The next step is listing as many features of your product as possible. Essentially, you can approach it in three consecutive steps:

  1. list and document all the features of your future product – for both hardware and software parts;
  2. define the most important features or MPV (main parameters/features of value);
  3. list all the features in order of importance, starting with the most crucial (MPVs).

Remember that adding features to the design can increase the cost of product development, thus it is imperative that you break down and rank the different features.

6. Defining the MPV (main parameters of value)

The term MPV is taken from TRIZ/TIPS, a different type of design thinking method with a specific emphasis on design engineering. MPV lets you settle on one or two ‘killer features’ that your customers are willing to pay for. Do not confuse this with the common MVP, or a minimum viable product, which is also used in a new product development process.

The defined MPV is the essence of the customer feedback and your idea validation. The table below demonstrates why MPV plays a significant role in new product development. PV = Parameters of Value in a new product. MPV = Main Parameters of Value that are non-existent on the market.

MPV illustrated (source)

7. How many separate devices do you have?

It is a common practice for products to comprise two or more separate devices. To illustrate that,

  1. you develop a new IoT toothbrush powered by a battery, and you want it to be charged by a charging station;
  2. your IoT device uses Bluetooth to channel data to a cloud and, therefore, requires an IoT gateway, which is a separate device of its own;
  3. you develop an e-scooter or e-bike which requires a charger so that the rover can replenish its battery.

We recommend carefully weighing the pros and cons of having additional devices as part of your product, and trying to minimize their number as much as feasible. To give you an idea, it can be possible to get rid of the charging station and rely on micro-USB or C-type USB instead of employing a charging station; or selecting an IoT product off the shelf, utilizing a common strategy to connect your device to the smartphone via Bluetooth, instead of developing an IoT gateway device. All of these can help you cut development and manufacturing costs nearly in half, which will accelerate market entry and make the development of your MVP product LEANer.

8. Specify Manufacturer’s Suggested Retail Price

Specifying the retail price is tied to your future product’s manufacturing cost, or Cost of Goods Sold (COGS). The Manufacturer's Suggested Retail Price (MSRP) is equal to the retail price.

Knowing the product’s retail price target is highly beneficial for designers when choosing the right components and optimizing volume production costs. Design engineers usually use the term ‘design-to-cost’ (DTC), referring to the process of optimizing the development strategy to accord the defined cost with design parameters while developing a product.

Anyway, the rule of thumb for a hardware business is as follows: the COGS, which is a combination Bill of Materials and other production and logistics expenses per unit, should account for 20-25% of the MSRP.

In startups with a recurring subscription business model, the product’s sales price is kept low: only 120-180% of the BOM or COGS cost. So one can deliver the product to customers literally at cost and enable sustained cash flow outside of the sale of hardware items. These business models are growing in popularity among IoT hardware startups, as they provide efficient LTVs and are favored by investors.

Manufacturer's Suggested Retail Price in hardware illustrated

9. Define your target production size in volume manufacturing

This section deals with Direct to Consumer (DTC) and Design for Excellence (DFx) strategies to be implemented by a hardware design team (X in DFx stands for either inspection, or assembly, or variability, or cost, etc). It suffices to supply an order of magnitudes: 100s, 1000s, or tens of 1000s units annually. These rough numbers lay out different approaches to the product’s architecture, components selection, and enclosure design.

10. Physical constraints: product weight and dimensions

Give an estimate of the size of your product. Specify if having small dimensions is critical. You may approach from the standpoint of the user experience and benchmark your product against your competitors. Building tiny circuits increases the cost, so think about whether it is indeed crucial to stick to a compact size. It is much more difficult for an electronics designer to organize the components securely and create a multilayer PCBA when designing a tiny PCB (Printed Circuit Board), not to mention the numerous noise and interference problems that could result from copper layers and components that are tightly packed.

PCB layout in CAD engineering development PCBA electronics board prototype
PCB layout

Weight and size are obviously vital in B2C consumer products, but it's also wise to consider them up front when creating a B2B product. For example, you should consider how you will install or move a B2B product before developing it. Will you be mounting it on a wall that might require disassembling the wall?

11. Determine the operation environment

Generally speaking, the environment can be indoor, outdoor, or a water environment.

Water resistance can be an essential but costly feature of your enclosure. Water resistance is classified in the IP codes that refer to intrusion protection, dust resistance and waterproofness of your device. When achieving specific IP protection in prototyping and production validation tests, designing a waterproof casing is always more expensive since it requires specific approaches.

International Protection Code Table - IP ratings for enclosures (source)

The other two significant factors that have an impact on your future design are temperature and humidity. While humidity impacts the lifespan of your product, temperature affects electronics and battery performance. If operating temperatures are below 0°C, equal to 32 °F, the designers should implement specific measures to prevent mechanical parts from freezing. They will want to add permanent heating for the battery or even consider replacing certain materials whose physical properties change at low temperatures.

12. Decide how your product will be powered

There are only a few ways to power your product: batteries, power outlets, solar power. It is unusual though to have a fuel-cell-powered or pneumo-powered device. Nowadays, Li-ion and Li-Poly types of batteries are the most common ones, however, they can incur further complications in selecting IC and preparing certification.

If you stick to using a rechargeable battery onboard, be specific about how long you want your device to operate on it. Since extended battery life necessitates power budget, components optimization and/or choosing a larger battery size, which in turn requires larger mechanical dimensions, this will give the hardware engineers useful information for mechanical and electronics design.

Engineers will greatly appreciate it if you indicate the hours that your equipment is actively consuming power and the hours that it is inactive. To illustrate that, if you have a DC motor attached to a mechanical gear that opens a camera lid, you’ll want to specify how many times per day this feature will work. In the case of an agricultural IoT sensor, which measures soil moisture and triggers crop irrigation, you will specify how often your device transmits information. When you have a GPS or a cellular connection that drives power consumption, you will define how long these features must be active.

PCB fitted with batteries

13. Decide in which countries and regions your product will be sold

Specifying target markets where your hardware, or IoT product will be used is important for three reasons:

  1. Power outlets differ from country to country. Some have sockets of 50 Hz frequency, others have 60 Hz ones; the USA standard is a 110 V power socket with that of 220 V in the EU;
  2. Telecommunication standards and wireless protocols vary from country to country. This must be understood from the beginning of the design.
  3. Certification and standards also vary from one country to another.

14. Determine connectivity and wireless requirements

The wireless requirements for your product are dependent on its use cases. With a high transmission rate, your connected hardware product will require a lot of power, and in some cases (e.g. a metallic enclosure) a custom external antenna. Setting up Bluetooth pairing between your gadget and a smartphone is the simplest approach to enable connectivity. But depending on your use-case, alternative wireless protocols are also accessible, such as Wi-Fi and cellular ones, namely 2G, 3G, 4G, 5G, LTE, GSM, etc.

Additionally, your use-case should outline the connectivity range and the data volumes you must send. While specifying, you may end up having NFC, RFID protocols, or choose to stick to long-range IoT technologies, such as LoRaWAN, ZigBee, Z-Wave, BT long-range, and others.

Bluetooth in IoT solutions

15. Lay out sensor requirements for an IoT connected product

With the advances in semiconductors and materials science, There are a variety of sensors available that can be used to deliver the primary functionalities of a specific IoT product. These include:

  • GPS/BEIDOU/GLONASS;
  • various accelerometers and gyroscopes; 
  • pressure sensors; 
  • compass (magnetometer) sensors; 
  • magnetic field sensors; 
  • CO2 (carbon dioxide) and CO sensors; 
  • temperature and pressure sensors; 
  • humidity sensors.

Medical (IoMT) devices can employ: 

  • HRM (Heart Rate Monitor);
  • EKG sensor;
  • blood oxygenation sensor. 

Modern consumer and wearable devices require fingerprint and touch sensors. Hence, try to specify what your sensors should be and relate them to the product’s features as much as you can.

Keep in mind that each sensor technology has inherent restrictions on accuracy. Determining whether the data obtained from any form of sensor should be highly exact, precise, or rather qualitative is therefore extremely beneficial.

World’s hardware sensor market in relation to IoT

16. Processing capacity

There are four options to choose from:

  1. microcontroller (MCU);
  2. chips; 
  3. microprocessor;  
  4. FPGA.

MCUs and chips are commonly picked for an IoT device, and it is possible to get away with using a simple, dependable MCU in 85% of designs. Microcontrollers are used to process data from various sensors with a minimal computational capacity. 

Chips can be thought of as miniature versions of MCUs, incorporating the functionality of both microcontrollers and auxiliary components, such as BLE, GPS, cellular, etc. Using chips in wearables design is quite advantageous, but it is often prohibited since chip vendors won't supply documentation and SDKs for these chips if one doesn't plan to buy 1 million chips at once. However, in recent years certain chip providers lowered the entry barrier for low volume chip procurement, e.g. Nordic Semiconductors, and now provide documentation, as well as development kits for their chips.

When substantial computation capacity is required, such as for the real-time processing of massive volumes of sensor data or any type of video processing, namely machine vision or hardware-enabled AI/ML, microprocessors find a particularly specific application. A microprocessor can alternatively be thought of as a small computer running the Linux embedded, Android, or Windows operating systems.

FPGA, or Field-Programmable Gate Array, refers to an integrated circuit designed with custom embedded software for very specific and rare use-cases, where low-volume and custom hardware-based computational capacity is required. FPGAs are frequently used in the academic, aerospace, and defense sectors, thus you most probably won't require them when designing your product.

17. Find a proper display

The display will be one of the most costly components in your BOM and will determine your unit cost. The display will use up the majority of your power budget and drain the battery of your portable device. Therefore, consider how big your display should be and what colors it should have, e.g. LCD or LED. Describe the information you intend on showing on your display. Do you want to see only text lines, or would you also like to see graphics, pictograms, or even video?

In some cases, replacing an expensive LED/LCD display with a few basic and cheap LED indicators may be a good idea to stick to.

LCD blue display 204B BL LCD enabling 4 x 20 characters
LCD blue display 204B BL LCD enabling 4 x 20 characters

18. Specify your enclosure design and product appearance

Consider how important aesthetics and appearance are. It is essential for a design engineer or an industrial designer to be aware of the appearance in advance. The industrial designer and design engineer may go through multiple versions before settling on the final product appearance. Therefore, we advise making use of the many product designs that are currently on the market while keeping user experience in mind. 

19. Specify moving mechanical parts

Moving mechanical components can be challenging to design. If your product is foldable or has any moving parts or features, such as fans, gears, or lids, you need to describe this and consider the possible uses for these mechanical characteristics because they could add an R&D component to your product development program.

If you are not well-versed in mechanical design, it would be advantageous to explain the purpose of having a moving mechanical part.

A perfect depiction of the moving mechanical parts as part of the product
Hand energy project. Demonstrating moving mechanical parts (source)

In closing,

In this article, you will find answers to the most common questions related to product development. General guidance on how to demonstrate feasibility of your idea, lay out the purpose of the future product, determine essential features, opt for appropriate product components can be found above. 

One more important thing to remember though. Product development is an iterative process, with its inherent pitfalls and bottlenecks. To sidestep the problems, learn our most recent article.