You need to decide why you want a patent. In many cases it is best to make the application, and drag out the process as long as possible, to keep costs down, while trying to make and sell the product. If the product is a flop, drop the application, or sell it to someone who wants to pursue it further. If the product is a success, continue the patent application and keep it or sell it to investors. The key is keep the up front costs down while you work on commercializing it. You can also file a provisional application with just 1 rudimentary claim, that gets you a filing date, or invention date, holding spot, and that gives you 12 months to file a formal application based on the original preliminary date, and puts off the other fees, like examination fees. The provisional application fee is $110.
That gives you a date priority over others that might file after you, and allows you to disclose and sell the product with a pending patent application claim on the literature.
The basic filing fee may be $165, but the $270 (small entity) basic search fee and $110 (small entity) basic examination fee are required at time of filing as well, so $545 ($462 if filed electronically) in total.
I read this after my last post, and I agree with you. I just can't stress enough that the non-provisional case has to be filed on or before the 12 month mark. It would be terrible to lose the earlier filing date on a technicality. All that a provisional requires is (taken from http://www.uspto.gov/web/offices/pac/provapp.htm):
A filing date will be accorded to a provisional application only when it contains:
•a written description of the invention, complying with all requirements of 35 U.S.C. §112 1st paragraph and
•any drawings necessary to understand the invention, complying with 35 U.S.C. §113.
The search fee and examination fee is not required for a provisional application in the first year.
I am not sure if the search fee (search) it is ever required. I think you can do your own search, but I am not sure on that. I think the examination fee can be delayed until well after the search is complete, if you order a search. IN other words the costs can be delayed and staggered.