Re: Looper development and production costs?

[Mark Sottilaro <sine@zerocrossing.net>]

I don't actually own one, so I can't say, but it seems like the EDP has 
a pretty functional faceplate.  If you're looking to cut corners, I 
wouldn't worry about that.  You can do a lot with a cool silk screen 
design and a nice Logo.  Figure about $3-5K would more than cover it.

Screw it, for loop kind, I'd do it for free.

Mark
(also a graphic designer)

On Saturday, October 13, 2001, at 06:18 PM, Kim Flint wrote:

> At 01:12 PM 10/13/2001, Doug Miller wrote:
>> Any $ put into design ALWAYS pays off big time on the bottom line.
>>
>>> If Gibson cares about selling EDPs, they'd get an industrial designer 
>>> to redesign the face plate.  Graphic designer to redo the logo.  Do 
>>> any of these things make the EDP a better product?  No, but extra 
>>> sales would sure influence someone into throwing cash at an EDP 2 
>>> project.
>> __________________________
>> Doug Miller
>> Graphic Designer
>
> I guess it makes sense that a graphic designer would think so. I tend 
> to agree. but again, let's look at numbers to do such a project. How 
> much would it cost to for this design work, and how many more sales 
> would it generate? Would the additional sales even be enough to cover 
> the additional cost? I'll make some wild guess estimates. Since you 
> want to redesign the faceplate, in addition to industrial designers and 
> graphic designers that requires new engineering work to do the 
> mechanical redesign of the metal, and then the electrical engineering 
> and PCB layout of the front panel PCB that holds the parts. Then of 
> course, the NRE charges for retooling the metal and PCB fabrication, 
> and silkscreens for the paint, etc. Probably you need to redesign and 
> reprint any marketing literature also. I guess you have to redesign the 
> footpedal too, but I won't count that.  So I'll estimate:
>
> Industrial design:  $20,000   (that's much cheaper than ID estimates 
> I've gotten for other things, but we'll find some cheap guy to do it..)
> Graphic design of new logo:  $5000  (? not sure what that costs.)
> mechanical engineer for 1 week: $5000
> electrical engineer for 1 week: $5000
> PCB layout designer for 1 week: $5000
> NRE charges on PCB and metal tooling:  $5,000
> prototype build and testing:    $7500
> redesign, reprint marketing lit:  $2500
> = $55,000
>
>
> How many extra units do we need to sell to break even on that?
> if list price is $1150, wholesale is probably half, $575.
> Probably 50% of wholesale price is COGS, so that leaves $287.50/unit 
> after manufacturing costs.
> we have a corporate requirement to maintain 30% margin, which is not 
> even that much for a low volume product, but .3 x 575 = 172.50, so that 
> leaves us with $115.       presumably the division has overhead costs 
> to pay for office rent, salaries, etc., let's say that's 10% of income 
> which is probably too low, or $57.50/unit, leaving us with $57.50. But 
> let's say we tighten our belts somewhere and manage to devote $75/unit 
> to pay for this redesign.
>
> $55,000 / $75 = 733 units needed to be sold just to pay off the cost of 
> this redesign and break even. I guess these should be counted as 
> additional sales beyond current figures to make it worthwhile. There 
> have been very few years in the echoplex's history where that kind of 
> volume was done, so we are talking about something on the order of 
> doubling sales or more. Even if that is the wrong way to look at it, 
> maybe we are optimistically talking about only a 50% increase in sales 
> needed to cover the cost and take the rest out of existing sales. We 
> will say that is 1/2 our number above, or 367 additional units sold.
>
> Now, is a new faceplate design for this product going to generate 367 - 
> 733 more sales? is this project realistic?  How many people base their 
> decisions on buying rack mounted musical instrument gear on how it 
> looks? My guess is, somewhere near 0. Even if just attracting more 
> attention is all we hope to do, will we attract that much more 
> attention just by changing the faceplate, and convert it into 367 more 
> sales? I doubt it. You might even lose sales because people already 
> recognize it as it is, and you will need to spend a lot of effort to 
> reeducate the market.
>
> If you ever tried to design a 1U 19" rack faceplate, you would know 
> that there just isn't a whole lot of room to do anything interesting in 
> that space, with the constraints of the hardware mounting room behind 
> it. You mostly attract attention just by looking different from other 
> stuff, and the echoplex accomplishes that already just by being 
> NotBlack. If you look at a rack with an EDP in it, you spot it 
> instantly because of the contrast with all the surrounding stuff. Even 
> if you thought it was ugly, you still saw it first.
>
> Right now, the echoplex faceplate is fairly low cost to make, just 
> stamped sheet metal, painted and silk-screened. We don't want to 
> increase the cost by doing this redesign, which would raise the list 
> price. That would reduce sales, countering whatever effect our redesign 
> gives. So we have to limit our poor designer to avoid any fancy molding 
> or extrusions, custom knobs and buttons, etc. unless we are willing to 
> raise the price. He can only work with stamped sheet metal and paint....
>
> If you ask me, that $55,000 is far better spent on advertising, 
> in-store demos, endorsers, etc. That will bring a lot more sales than a 
> different faceplate. Or you could spend it on new product development, 
> etc.
>
> kim
>
>
> ______________________________________________________________________
> Kim Flint                     | Looper's Delight
> kflint@loopers-delight.com    | http://www.loopers-delight.com
>