Draw further inspiration from the software world, and treat your whole business as a prototype that you are iterating on as fast as you can.
For example, before you have a pcb, a design, or even a finished spec, start finding where your expected customers congregate and feel them out about specifications and price point. Each time you get feedback, including that no one even responds, factor that in to what/where/how you represent the project the next time.
If you don't get any or much response, then that is the first problem you need to fix. Are you looking in the right places? Are you looking for the right people? Are you focusing on the right details? Is your price-point too high? Perhaps your price is too low to be taken seriously?
As you work out product/market fit, you can fill idle time by starting to figure out how you'll get the first, say, dozen, made and into the hands of people for field testing.
As you are working through things, worry less about getting the lowest unit cost possible, and more about getting things done quickly and relatively reliably. If you can sell your first small production run at break even, then you'll have a really good perspective on where to go next. Was it pretty easy to sell out, do you think you can sell lots more? Or, did it take a lot of time and effort for the last 5 to sell? If it is the latter, then your most pressing problem isn't the cost or effort of production and distribution.
If you do have a good sign of healthy demand, you can start iteratively optimizing. The decisions should be easier too, because you'll have pretty good numbers to work with for estimating ROI on various improvements you might make. If you are confidant can sell 100 units in the next month, maybe your best ROI is just to negotiate with whoever made your last, smaller batch. If you find that pulling things off the shelf putting them in a box, slapping a mailing label on them, and dropping them of at the post office on your way to work the next morning is no longer tenable, you can figure out what it would be worth paying Amazon or someone else to do individual fulfillment for you.