This project has been in a weird filler state for a while, but I finally sat down and worked out my pricing structure and launched the campaign last night - and I'm excited to get it off the ground! In the interest of clarity, I'm disclosing a lot of information here about the development process and my pricing/cost structure.
After receiving a number of quotes from around the world, I decided to go with a supplier who I have a good professional relationship with: Mattson-Witt Precision of Barrington IL. In 2011 and 2012, I sourced many thousands of dollars of parts from them, and the results were excellent. I have clear lines of communication with the director of operations and consider them a partner in this project. Incidentally, they were *not* the cheapest bid I received - their quote fell somewhere in the middle of the pack - but their delivery timetable was good and I can trust that they'll stick to their word.
When I first resurrected this project, I posted a bit of background on the design here and shared it with the framebuilding community. I received a bit of interest and some informal preorders, and based my RFQ quantities around an extrapolation of that data. I wanted the retail price of the parts to be similar to other similar parts on the market, and also wanted to offer quantities that made sense to my customers.
The price from the machine shop is $5.07 apiece at a quantity of 150 (I had tentative preorders of about 90). The retail price structure is as follows:
- $8.50@2 = 68% markup = $6.89 net income
- $8@4 = 58% = $11.76
- $7.50@8 = 48% = $19.47
- $7.32@16 = 45% = $36.10
- $6.08@32 = 20% = $32.45
- $5.85@64 = 15.5% = $50.29
If I sell just 150 parts, my net income tops out at $516.75 and tapers down from there - precipitously, if I get a few large orders. My hope is that I can sell more that 150 parts and increase my order quantity accordingly. At quantities of 500, I expect my wholesale price to be closer to $4 each, which obviously means more money in my pocket. My best case scenario is that I pre-sell enough parts to justify folding my profits into a larger order, which I can then sell to new or repeat customers down the line. I hope to determine the order quantity by early-mid February (a few weeks before the campaign ends) and be able to place my order so that it's delivered right after my funding date. That way I can be ahead of schedule on shipping and ensure that none of my customers are put out by delays.
A note about shipping and handling: I was a little unclear on how to deal with this, and decided in the end to apply a $5 flat S&H fee to all orders. I suspect that I'll be in the black on small orders, but on larger quantities that'll probably change quickly. I'm not investing in any fancy packaging - I'll probably do a small ziploc bag from McMaster + a small plain envelope - so all I need to recoup is the actual shipping charges and my time counting and bagging the parts and getting them to the carrier (likely USPS).
I'll be updating this project as I near my funding goals. If anyone has *any* questions about the design, how the parts are used, or the cost structures I've listed here, please comment below - and thanks for your support!
NOTE: For anyone who's curious, you can see a fully dimensioned drawing of the parts here!