So I finished the design and preliminary testing of my product. It is a consumer product, with hopes for direct web sales, but reseller option may come in sooner or later. Extensive customer research and preparation is done a long ago-I do know who my customer is, how do I benefit him, what is he willing to pay, etc. That is not the question.
Currently, if I pay off the cost of my bill of materials and labor, I left with approximately 35-40% gross profit margin for small batches of ~100 units.
All that is with standard components, purchased from McMaster and Digikey, and without any tooling or manufacturer optimization (couple of local machine shops, CNC machining, no molding or casting, which I am planning to switch to later on). I expect to sell ~4-5k units annually in the developed stage of my venture.
Do I have a solid business case here? Any opinions, experiences? My worry is the profit margin: it seems to be on the lower side.