How to Develop a New Product: A 7-Step Guide for Entrepreneurs (2025)

Even the most successful ecommerce businesses rarely get from idea to finished product in a straight line. If you’re just starting out, you might be wondering: How do you turn the product idea in your head into something customers can buy?

This guide breaks down the product development process and shows you exactly how to bring your idea to life.

What is product development?

Product development is the process of taking a product from idea to market. The process includes: 

• Designing the product

• Creating a product roadmap

• Conducting market research

• Launching your product

• Collecting customer feedback

The process brings together many parts of your business, from design and engineering to marketing. Larger companies often have product managers who guide products through development. 

📦 Read more: How To Create a Successful Product Development Strategy

The 7-step new product development process

1. Generate an idea
2. Sketch your product
3. Validate your product
4. Create a prototype
5. Source materials and production partners
6. Calculate your unit economics
7. Launch your product

While product development varies by industry, these seven stages form the foundation of bringing any new product to market. Here’s how to use this framework for your product:

1. Generate an idea

Don’t wait for the perfect never-before-seen product idea to strike. Many successful products build on existing ones. Try the SCAMPER framework to spark ideas: 

• Substitute: Replace materials (like faux fur for fur)

• Combine: Merge products (like a phone case with a battery pack)

• Adapt: Modify for new needs (like nursing bras with front clasps)

• Modify: Improve design (like sleek electric toothbrushes)

• Put to another use: Find new applications (like memory-foam dog beds)

• Eliminate: Remove elements (like cutting out middlemen to reduce costs)

• Reverse/rearrange: Change perspective (like switching from plastic to glass food storage)

Take Lindsay McCormick’s story. She founded Bite toothpaste tablets by modifying an existing product. “When I started looking into toothpaste and the way it comes in a plastic tube—and there’s a bunch of harsh chemicals, artificial flavors, ingredients that come in it—I thought: I could make something that’s better for the planet and better for our body,” Lindsay says on Shopify Masters.

📦 Read more: Find New Product Ideas in These 16 Places

2. Sketch your product

With your idea in hand, it’s time to map out what your product will look like. Create a draft that lists all components, whether your product is physical or digital. Don’t worry if sketching isn’t your strength—you can hire a technical illustrator through platforms like Dribbble or UpWork.

3. Validate your product

Before investing too much time and money, make sure your target market wants to buy your product. Product validation helps you analyze both functionality and market fit. Try these validation strategies:

• Send online surveys to potential customers

• Start a crowdfunding campaign

• Do test marketing

• Research market demand

• Study your competitors

• Run a feasibility study

Ask yourself how your product fits in the market:

• Does it expand an existing category?

• Does it disrupt a category?

• Does it create a new category?

Finally, conduct a competitive analysis. Look closely at your competitors to understand how they attract and sell to customers. Ask potential customers what they like and dislike about similar products to find your competitive advantage.

4. Create a prototype

Prototyping means crafting a finished sample before you start mass production. You’ll likely make several versions, improving each one until you have a final sample you’re happy with. Consider whether you need patents to protect your design.

Test your first usable version (your minimum viable product) with a small group to:

• Gauge interest

• Test pricing

• Collect feedback for improvements

For example, when Jen Liao started MìLà, she tested her soup dumpling prototypes by hand-delivering them to customers in Ziploc bags. “Step by step, we kept evolving what we had in terms of the packaging, the product, the infrastructure,” Jen says in an episode of Shopify Masters. “And we just let the demand lead us to what we needed to unlock next.”

🌸 Podcast: Why Perfecting Product Design Was Key to This Brand’s Success

Charlie Bowes-Lyon and Freddy Ward launched Wild to eliminate single-use plastic deodorant packaging. Their product development process spanned 35 iterations before launch. 👉 Learn more

5. Source materials and production partners

After finalizing your prototype, build your product’s supply chain by finding manufacturers and suppliers. Here’s how to find the right partners:

• Get samples from multiple suppliers and compare quality and costs.

• Test samples from potential manufacturers.

• Weigh local vs. international sourcing options.

• Plan your storage, shipping, and warehousing needs.

6. Calculate your unit economics

With your production partners in place, figure out how much you can make per unit sold. This means understanding your costs and setting the right price. 

Star by calculating your cost of goods sold (COGS), which includes:

• Raw materials

• Factory setup

• Manufacturing

• Shipping

• Import taxes

• Other direct production costs 

Note that COGS are just your production costs—you’ll have other operating expenses like overhead and marketing to consider too.

Once you know your costs, develop your pricing strategy.

Get your free product development worksheet

7. Launch your product

You’ve created a product with market appeal that can turn a profit. Now it’s time to introduce it to your customers. 

Here’s how to plan a successful product launch:

• Choose your timing: Pick your launch date based on seasonality, consumer trends, and market conditions.

• Select your channels: Plan how you’ll promote your product through SMS, email, social media, and affiliate marketing partnerships.

• Build your strategy: Create core messages that tell your product’s story and show customers why they should buy. 

• Get customer feedback: After launch, collect reviews and run surveys to learn what customers think. Use their feedback to improve your product.

📦 Read more: 25 Alternatives to Running Paid Ads to Promote Your Business

Product development examples

• Bola Grills
• City Seltzer
• Brightland

Every business owner’s product development journey looks different. Here are some real-world examples to inspire you: 

Bola Grills

Bola Grills founder David Levy wanted to create a grill that wouldn’t pull him away from his guests, so he designed a tabletop version. He focused on key features like proper charcoal airflow and heat-safe technology to protect tables. College students helped build his prototype, and a crowdfunding campaign proved his concept, raising $22,000 and selling 94 grills.

Then David hit a roadblock: His manufacturer wasn’t working out. “After about the fifth sample that they sent me, I made one of the most difficult decisions of my life,” David says on Shopify Masters. “And that was if I wanted to pull the plug altogether or push through and find a new manufacturer and basically start over.”

David chose to start fresh. His persistence paid off, and he launched his finished product just in time for barbeque season.

City Seltzer

Sometimes great products start by accident. When Dominion City Brewing hosted a beer festival in 2020, they sold creamsicle-flavored seltzers to help keep customers hydrated. 

“Afterwards the feedback was all, ‘That was great. Where can I get more of this orange cream water?’” says City Seltzer co-founder Josh McJannett on Shopify Masters. “That gave us an idea that maybe there was more to this than just tempering people’s beer consumption.”

Josh’s team already had brewery production equipment and distribution networks. They created distinctive, brightly colored packaging and started selling at local bars and restaurants before moving to direct-to-consumer sales.

Brightland

Aishwarya Iyer started Brightland after noticing a gap in the olive oil market: no one knew where their olive oil came from.

“Everyone stands at the grocery shelves looking really confused—this was back in 2016 and 2017—and I was like, ’Wait, there’s got to be something here where we can build a brand that people feel really excited by, that people want to put out on their countertop,’” Aishwarya says on Shopify Masters.

She dove into research: taking UC Davis Olive Center courses, reading extensively, and talking with farmers. This helped her create a product that not only tasted great but supported local farms and brought transparency to the industry.

Aishwarya also developed smart packaging: white UV-protected bottles that look beautiful and keep the olive oil fresh by blocking harmful light.