Guide

Manage your research, design and development

Research and development - investment and risks

There aren't any hard-and-fast rules on how much you should spend on research and development (R&D) and product design. It can depend on:

  • the size of your business
  • your sector
  • the commercial potential of a project
  • the importance of the project to the future success of your business
  • the expected duration of a project
  • what your competitors are doing

You should always consider how R&D fits into your overall business strategy when deciding how much to invest. See strategy for research and development.

R&D risks

R&D always carries an element of risk because it involves trying out new, untested ideas. Common risks include:

  • new or modified products or services proving more difficult or costly to develop than anticipated
  • developing a product or service that isn't commercially successful
  • initiating the development of a product that turns out to be unworkable

R&D rewards

It can be helpful to think of R&D costs as an investment. There won't always be a return on that investment and sometimes you could lose your outlay entirely.

On the other hand, returns from R&D can be considerably greater than for other investments - and could even ensure your business' future survival.

An R&D project to improve an existing product or service has a far higher chance of success than one aimed at creating a new product or service but the rewards are likely to be far lower.

Government support

You may be able to get help with R&D projects related to product or process development. For more information, see innovation, research and development grants.