paper & pencil
Regardless of what level you're at, sketching is still a critical part of nearly every aspect of design. The pencil and paper...along with a decent eraser...are still used extensively in these parts.
iPad Pro
Electronic sketching devices let us iterate our sketches more quickly and create higher fidelity mockups. We've used Wacom tablets, but prefer the iPad Pro. We like to use the Procreate and Sketchbook Pro apps.
3D modeling software
If you're designing a physical thing with the intent to manufacture a lot of them, you're going to need to create precise 3D models of it. Here's what we have used:
SketchUp is a free, fun to use 3D modeling software. The first Capture Clip was designed entirely in SketchUp.
Solidworks is what we now design the majority of our hardware in. It is one of the industry standards in the world of 3D modeling. It's a beast of a program, both in terms of capabilities and price, and may not be suitable for folks who are just starting out in the world of 3D design.
Autodesk Fusion 360 is a great option for those who are starting out and looking to work on a budget. It's cloud based, fast, and cheap. In fact, they make it free so long as your company makes less than $100,000 per year. And once you eclipse that, they charge a very reasonable monthly subscription. And a big bonus is that it works on macs. Solidworks, to our great displeasure, does not.
2D Drawing Software
Both hardware and soft goods ought to come with 2D drawings. This is where you place the explanatory information of your products. Things like what it is made out of, what process is used to make it, how is it assembled, what color is it, and so forth.
For soft goods, we typically use Adobe Illustrator to create PDF design documents, which often include dimensioned 2D drawings that we've exported from our modeling software.
3D Printer
3D printing, along with the availability of CNC rapid prototyping services, have created a sea change in the way parts are prototyped. We have a machine shop with a basic lathe, mill, drill press, band saw, welder, and tools for grinding and polishing and the like. But in reality, most of these things can be done with a 3D printer these days.
We've been very big fans of the FormLabs Form 2 printer. It's relatively affordable and easy to use. But if you're not ready to drop $3.5K on a printer, you can always contract 3D printing work out. Most cities have local shops, but we've used Proto Labs quite a bit and are very happy with the turnaround.
Below: Scenes from a 2016 trip to our soft goods suppliers in Vietnam. We spend as much time as we can with our factories. It allows us to do rapid design iteration and prototyping in unison, which in turn tremendously speeds up our design process.