Prototype development is a stage in the new product development process. A new product originates as an idea. The idea is a descriptive statement that can be written or only verbalized. The idea is refined into a product concept that includes consumer benefits and features of the product. The concept is developed into a prototype, i.e. a working model or preliminary version of the product for size, fit, and potential merchandising. After several iterations, the prototype is perfected into the final product.

There are different types of prototypes. The first stage prototype is often used to validate the form and fit of contents and also to develop the manufacturing processes and techniques required to produce the product. This can cost anywhere from $500-$1500.

Next is the preproduction prototype, which is, for all practical purposes, the final version of the product. It should be just like the finished product in every way, from how it is manufactured to its appearance, packaging, and instructions. This final-stage prototype is typically expensive to produce—and far more expensive to make than the actual unit cost once the product is in full production—but the added cost is often well worth it. It is most valuable because it enables marketers and manufacturers to go over every aspect of the product in fine detail, which can head off potential trouble spots prior to product launch. Preproduction prototypes can cost $3,000-$10,000, depending upon iterations and intricacies of design of the part.