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Looper's Delight
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but does the edp need to be redesigned from scratch? aren't we talking about additions to a product that already works extremelly well? ----- Original Message ----- From: Andy Ewen <andy.ewen@trace-elliot.com> To: <Loopers-Delight@loopers-delight.com> Sent: Wednesday, October 10, 2001 1:08 PM Subject: RE: Looper development and production costs? > This is great stuff. I am totally serious about this as it is a very > interesting subject. > However, there are a couple of points that I would make: > If we are talking a Looping Device here, the best ever conceived by far, it > would still probably not sell in these quantities and certainly not for more > than a few years. The competition would catch up making further R&D > investment necessary to keep it at the forefront. > Manufactured cost for such a device, assuming it is made in the UK, is > likely to be at least double what you have suggested, maybe more. > Gibson require at least a 30% return on all products bearing the Gibson > name. > It would then have to go through the chain of distribution and then retail, > probably 50% then 50%, then local taxes before the user gets it, this would, > on your calculations make it about the same price as a small family car. > Oh, and the transport costs which you mention, but cannot be overlooked, UK > to US, UK to Europe Australia etc. > > Taking these points into account, how viable a project is it? > > > > -----Original Message----- > From: Doug Cox [mailto:bickleypunk@pdq.net] > Sent: 10 October 2001 16:45 > To: loopers-Delight@loopers-delight.com > Subject: Looper development and production costs? > > > Since I don't have experience in the audio hardware development field, I > have to make some broad assumptions. I'm sure Kim will let me know where > I'm wrong. > > If $2 million was spent on R&D, including the labor and materials for > development, testing, market analysis, etc... everything that R&D >implies, > these $s can be put on the balance sheet and amortized over 5-7 years. > Let's use 5 years for conservatism. That's $400k per year of amortized > (non-cash) expense. > > Let's say that following the R&D effort, the organization had an ongoing > overhead cost of $1M per year. That's just for executives, sales/marketing, > haircuts, etc. > > Let's say that the ongoing cost of production is $150 per unit. That > includes materials, labor, equipment depreciation, any licensing costs, etc. > "Cost of goods sold", as the beanheads call it. Let's also say that this > $150 per unit figure assumes that 2000 units are produced and sold every > year. > > So: > > $400,000 R&D Amort. > $1,000,000 Overhead > = $1.4M general expenses annually > divded by 2000 units > = $700 per unit of overhead costs > + $150 per unit mfg costs > = $850 per unit total costs > > If the company wants to earn a 15% return, they'd need to charge $1,000 per > unit > > All of this ignores transportation costs, which seems to be an important > issue in the current EDP scenario. Although I lumped a lot of things >into > those 2 general expense categories, I may have left out other important > costs too... > > Is this even close? How do other complex pieces of audio hardware get > developed and sold for less? Obviously, if the same company can spread that > $1m per year of overhead across multiple product lines, each one gets > cheaper. Same is true for some of the manufacturing costs... Finally, > economies of scale kick in for wildly popular products - if I can make >and > sell much more than 2000 per year, my costs per unit will drop dramatically. > > Hey, you asked... and I assumed you were at least 50% serious. At least > Kim, Andy, Matthias, et. al. could use this as a starting discussion point, > and help us understand the costs involved. Or not :) > > Doug > >