Hm - this strongly depends on what aspects of the device and/or app you want to test.
I'm from the field of lean ux/usability testing and we do several studies in this field. Especially with hardware and tight budget constraints it's hard to find workarounds.
- The major thing to reduce costs is do remote testing. (no travel costs, less time overall) - but hard to do with a hardware product. If your toy is for kids, this could even be harder.
- The second ones are incentives for the participants. (less costs for participants)
- Basic tools (start with pen&paper and free tools like skype etc.)
Disclaimer: Workarounds are workarounds and have their biases and downsides...
The most common ones we use are:
- Join a local startup initiative or similar (or family and friends), and conduct small testing with their members e.g. 15-30min usability test / interview. Mostly they are curious and want to help. Major drawback: mostly participants are not from your target group. But for some major issues and insights this should work.
Reduce the hardware dimension.
Sounds weird, but depending on the aspects you want to test, this could work. Multiple variants:
- You could record the reaction of the toy on video. (I assume the interaction is mostly in the app)
- You could do a webcam streaming and do the actions the user would do on the toy&app.
- You could record a whole interaction (incl. app) on video and let the participants comment on the things they see.
Basically you have to decide which aspects you need to test and what a real test is worth. And based on this choose the best workaround to conduct a usability testing.
Hope this helps and is an proper answer to your question or the obstacles you face currently - otherwise don't hesitate to specify the question.