Will,
The answer to your question varies considerably from one industry to the
next and varies among companies within each industry. In some of the more
mature industries, the range might be 1-to-3 percent of revenues, with
some companies spending less than 1 percent. In many manufacturing
industries, 4-to-6 percent might be the industry average, with quite a range around
the average, from 1 percent up to 7 or 8 percent, depending upon how
innovative the company is. For high-tech industries, where constant innovation
is the name of the game, the industry average might be above 6 percent,
with a range from 4 to 12 or 13 percent for large companies, depending upon
the range of products that company has. Many high-tech startup companies
have R&D expenditures that exceed revenue from sales for several years.
Another way to look at the figures is the R&D expenditures per employee.
Again, the figures will vary considerably, depending upon how capital
equipment-intensive that industry or company is.
Finally, something that is very difficult to determine, is the ratio of R
to D (if you square this figure, you get R2D2). The complaint by some
people these days is that companies are spending more on D and less on R. For
most of your IDSA colleagues, spending more on D and less on R is
probably good, but I'm not sure how it impacts the business of a curious product
development guy.
;>) Brock Hinzmann
Pattison, Will wrote:
>ok, fellow product development people, i have a question:
>
>does anyone have figures- as a percentage of gross revenue- for how much
>companies typically spend on r & d?
>
>thanks in advance- i appreciate all input, and if you want to email info
>off-line, it will remain strictly confidential.
>
>will pattison, idsa
>curious product development guy
>ignition
>www.ignitioninc.com
>
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