Author Topic: EEVblog #887 - The Economics Of Selling Hardware  (Read 5492 times)

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Offline Brumby

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Re: EEVblog #887 - The Economics Of Selling Hardware
« Reply #50 on: June 13, 2016, 11:51:08 AM »
... but what tips if any would you give for someone looking to become a consultant and finding someone who wants work done?

This is where the phrase "It's not what you know, but who you know" is champion.

My 2 cents....

Consultancy is all about reputation - and the perception of that reputation is best presented by people who know people ... and the reasoning is simple.  There is more at stake for each of the members of the 'referral chain' and they already have an established level of credibility with each other.  A public image is helpful, but this personal connection is gold.  As a result, there will be a higher degree of trust as each member along the referral chain will not compromise their credibility (too much), so any recommendations will often go straight to the short list and sometimes they will end up at the top.

It is direct knowledge of a potential consultant's demonstrated abilities and foibles that has power because of the personal delivery system.  A public reputation is not so personal.

Another aspect of this is that if a personal recommendation is offered from one member of the referral chain to the next, it might be taken as a personal affront if it was rejected.



JMHO
 

Online AndyC_772

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Re: EEVblog #887 - The Economics Of Selling Hardware
« Reply #51 on: June 13, 2016, 07:10:44 PM »
are you owing all of your success to just who you have acquainted with over the years

I like to hope that at least some of it is down to good quality engineering and the support that goes along with it!

Engineering skill alone doesn't automatically create customers, though, and for that you need a well stocked address book. I don't know of any good alternative.

My first customer was a company that had recently taken on someone I used to work with. They needed a part time design engineer, he suggested me, I got an email asking "please could you help us with...", and that was the start.

As soon as it became known that "Andy is doing consultancy work now", my phone started ringing, and it was all from people who had either seen my work before, or knew someone who had. Clearly I had a network of people out there on whom I'd made a good impression, and they put my name forward when requirements came up. Beer has changed hands on multiple occasions.

I also went to a few trade shows, chatted up a people I saw as potential customers or business partners, and got some jobs that way too. They've tended to be one-offs rather than regular work, though I think that's just coincidence. This is probably the best way I've come across to find completely new customers, unconnected to anything I've done previously. At a show, people expect to have business cards shoved into their hands, and it's not annoying or offensive like cold calls or junk mail.

Quote
You almost need a resource like freelancer but without the people willing to do an entire 3 months project for the price of a packet of Quavers!

Bit of a minefield when it comes to "going it alone"!

Too right. I looked at a couple of these sites in the early days, but I view them very much as a race to the bottom, and not good for either customer or engineer.

I think there are two kinds of people who go it alone and try to run their own business.

One is the skilled, capable engineer, probably fed up with working for 'the man'. These people know their stuff and are able to either do a great job, or not take on a job at all. Clues are that they're hard to find, always busy, and won't take on a new project unless it's something they're actually interested in.

At first glance they might look a bit more expensive than you were expecting too, because although to some extent they're probably doing it for the love of technology, they're not directly competing on price either.

(I can't, by the way, over-emphasize the importance of being able to identify jobs that are unlikely to go well, and turn them down on day one. This probably warrants a new thread all of its own.)

The other is the engineer, or wanna-be engineer, who can't get or hold down a good regular job, and who resorts to going it alone as a fall-back. These guys don't have the network of contacts to recommend them by word of mouth - at least, not yet - and so must advertise more widely. Competition drives down prices until, as you say, the going rate for a 3 month project barely covers the snack food budget for the job.
 
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Offline Wilksey

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Re: EEVblog #887 - The Economics Of Selling Hardware
« Reply #52 on: June 13, 2016, 08:10:40 PM »
That's a good call re the trade shows, if you spend 99% of your time working for "the man" and not really getting any customer exposure then you are likely to not know anyone worth knowing that will get you started, that is of course, luck of the draw if you are in a position to have contacts at a personal level.

Personally, I find word of mouth can go a long way, but it doesn't always do you any favours, as people, even though you don't know them, expect "mates rates" because of a personal recommendation, this is my experience, and sometimes the jobs themselves, well, you just have to say no sometimes!

Going back to the trade show suggestion, what kind of trade shows would you typically expect to get a participating audience?  The only ones I have been to in recent years has been the Electronics Design Show, and Southern Manufacturing, all which seem to be more about the people on the stands than getting the chance to people walking about.

So taking one of these as an example, would you just thrust a business card into someones hand as they walk past, or eavesdrop on their convo with the sales guy and sneak in afterwards? I should imagine a stand would be quite pricey for a one man band to have.

Networking is key, and I am always looking for new ways to "network", and I am quite interested in the trade show idea, do you have any other networking tips (anyone else feel free to chime in also!), i'm sure I wouldn't be the only one interested, more for expansion than "going it alone" reasons, but I find it difficult to understand if you essentially come from nowhere without any contacts in the industry where you might start out, people have asked me, even though I am only a small player, and it has been through people who I have met through work etc, and I have no idea outside of that circle how to make new business / like minded acquaintances!

Cheers
 

Offline coppice

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Re: EEVblog #887 - The Economics Of Selling Hardware
« Reply #53 on: June 13, 2016, 08:24:18 PM »
Quote
You almost need a resource like freelancer but without the people willing to do an entire 3 months project for the price of a packet of Quavers!

Bit of a minefield when it comes to "going it alone"!

Too right. I looked at a couple of these sites in the early days, but I view them very much as a race to the bottom, and not good for either customer or engineer.
Freelancer seems like an excellent way for people who don't really know what they want, or what its worth, to link up with people who can't really do the work. I find it interesting that no serious system of the freelancer type has appeared.
 

Online AndyC_772

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Re: EEVblog #887 - The Economics Of Selling Hardware
« Reply #54 on: June 13, 2016, 08:58:41 PM »
Going back to the trade show suggestion, what kind of trade shows would you typically expect to get a participating audience?  The only ones I have been to in recent years has been the Electronics Design Show, and Southern Manufacturing, all which seem to be more about the people on the stands than getting the chance to people walking about.

You've got a few options here.

You could hire a stand at, say, Southern Manufacturing. It would be expensive, probably quite bare unless you also put some real effort into getting some promotional materials made, and you'll be the poor sod who sits there for the entire three day show drinking coffee and looking lonely.

Or, you could do exactly what the show's organisers insist you don't do, which is: walk around talking to exhibitors who are contract manufacturers, other design houses, and companies that make some electronic items (but whose primary business isn't necessarily in that area). Also talk to anyone else you see who looks as though they might either need design services themselves, or would have customers of their own for whom electronic design would be a value added service that you could offer together.

This would, of course, carry a risk of getting chucked out of the show by security, because the organisers are very keen to ensure that people seeking customers pay for a stand. So, I couldn't possibly recommend that you do this, regardless of how effective a strategy it might be. (Perhaps if you know anyone who is actually exhibiting, you could ask them if they can provide you with an exhibitor's pass in exchange for a certain quantity of beer?)

Another option is to go to a show which isn't about electronics, but is instead all about some other area for which you'd like to design products. You'll enjoy going round the show a whole lot more anyway, but while you're there, take time to speak to companies making products that you think you can improve on.

There's often senior people available at least some of the time, and if you explain that you're able to offer a service that'll make their product better, you might be able to arrange a meeting the same day. If you have an idea for a product yourself, take along a working prototype and demo it; there's no better way to gain credibility or to plant ideas about what can be achieved.

I'm very much of the opinion that the best products come from people who understand two subject areas well: design engineering, and the target market. If you only know the engineering side, you risk coming up with something that works really well, but doesn't actually do what customers want. Or, if you only know the target market well, then you get a product that would be popular if it weren't for its design deficiencies.

This was one of the biggest hurdles I had to overcome when I set out. I'd been working in quite a niche field for a long time, and it wasn't something for which there's a readily available mass market. That's why I went into 'general' consulting, in the hope that my skills would turn out to be sufficiently transferrable.

I never planned it as such, but I've ended up doing mostly automotive work, which is nothing to do with the job I had before. If I were looking for new customers today, I think I'd be going round car and bike shows rather than electronics shows... if only because, at worst, I get a fun day out.
 
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Offline coppice

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Re: EEVblog #887 - The Economics Of Selling Hardware
« Reply #55 on: June 13, 2016, 10:20:02 PM »
So, Andy, as a director of several companies, are you owing all of your success to just who you have acquainted with over the years.
I think most people who have started anything will agree that two of the biggest problems you face is trying to make contact - contact with potential vendors on one side, and contact with potential customers on the other. Its not so hard to find vendors, but finding good cost effective ones can be a huge deal. Finding good customers is generally hard. The people you already know when you start - at least the ones you didn't piss off along the way - are among your most precious resources.
 

Offline george graves

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Re: EEVblog #887 - The Economics Of Selling Hardware
« Reply #56 on: June 14, 2016, 02:44:29 PM »
Great video.  Glad you pointed out that it's not 2.5 times BOM - and that you have to factor in all your costs.  Sometimes the BOM cost is practically nothing.

Couple of questions.

- If your doing everything "in house" (aside from maybe a enclosure and PCB) what does one pay ones self for the labor? Do you pay yourself as the job your replacing?  For example, "pack for shipping" - do you pay your more-or-less minimum wage(or what ever a shipper person would get paid)? In other words - yea, putting a product into a mailer and throwing a shipping label on it costs you nothing, but how do you fill in the cost of that line item on your calculations?

- For something like you ucurrents, I know you've sold directly in the past, then switched to re-sellers, and I assume you are back to selling direct. Lets say you have no re-sellers, would you feel like you need to keep the "2.5" multiplier" just encase you you change your mind and have re-sellers again? Or would you adjust the price up and down depending on the situation?

« Last Edit: June 14, 2016, 02:46:41 PM by george graves »
 

Offline EEVblog

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Re: EEVblog #887 - The Economics Of Selling Hardware
« Reply #57 on: June 14, 2016, 03:02:45 PM »
- If your doing everything "in house" (aside from maybe a enclosure and PCB) what does one pay ones self for the labor? Do you pay yourself as the job your replacing?  For example, "pack for shipping" - do you pay your more-or-less minimum wage(or what ever a shipper person would get paid)? In other words - yea, putting a product into a mailer and throwing a shipping label on it costs you nothing, but how do you fill in the cost of that line item on your calculations?

For me specifically?
My situation is more complex than someone just doing this one thing.
But there are two ways to look at it and execute on it, depending upon how you want to structure and look at your company.
e.g. if you are company (Pty Ltd) in Australia, you have to take an actual wage in order to pay your bills privately.
If you are a sole trader then it's just one big slush fund in your name.
You can either chose to take all your profits effectively as a "wage", or you can chose to take part of it etc.
Depends entirely upon how you want to look at it and how much you value your time on other things you want/have to do. e.g. I have to produce a video blog which bring in more money, so using my time to pack and ship is not that smart, that is why I hire someone to do it.

Quote
- For something like you ucurrents, I know you've sold directly in the past, then switched to re-sellers, and I assume you are back to selling direct. Lets say you have no re-sellers, would you feel like you need to keep the "2.5" multiplier" just encase you you change your mind and have re-sellers again? Or would you adjust the price up and down depending on the situation?

In my view it's not good to keep adjusting prices, especially if the product is selling well enough at the current price.
Lowering the price might bring in more volume to compensate for the lower margin, but then again it might not.
I'd recommend keeping your options open and sell at the higher price if you can get away with it.
 

Offline sharvard

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Re: EEVblog #887 - The Economics Of Selling Hardware
« Reply #58 on: June 15, 2016, 11:10:14 AM »
I think there are two kinds of people who go it alone and try to run their own business.

One is the skilled, capable engineer, probably fed up with working for 'the man'. These people know their stuff and are able to either do a great job, or not take on a job at all. Clues are that they're hard to find, always busy, and won't take on a new project unless it's something they're actually interested in.

At first glance they might look a bit more expensive than you were expecting too, because although to some extent they're probably doing it for the love of technology, they're not directly competing on price either.

(I can't, by the way, over-emphasize the importance of being able to identify jobs that are unlikely to go well, and turn them down on day one. This probably warrants a new thread all of its own.)

The other is the engineer, or wanna-be engineer, who can't get or hold down a good regular j
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shortcuts: hit alt+s to submit/post or alt+p to previewob, and who resorts to going it alone as a fall-back. These guys don't have the network of contacts to recommend them by word of mouth - at least, not yet - and so must advertise more widely. Competition drives down prices until, as you say, the going rate for a 3 month project barely covers the snack food budget for the job.

There is at least one more kind of person who will undertake this challenge. I know, because I do not fit into either of the previously mentioned categories. It is also a bit more complex than just being tired of working for the ‘Man’.

In my mailbag note to Dave (sent with the Rocket Kit), when I mentioned having experienced an extremely negative employment experience and being tired of working for the ‘Man’, I did not elaborate on the details as I was trying to keep it brief. This has resulted in some speculation that I simply got tired of working for other people, said screw it, and decided to launch my own company. This is far from the whole truth, so I thought I would take a moment and elaborate on my specific situation. I hope the following will shed some light on my specific situation and possibly help someone to avoid having a similar negative employment experience of their own.

First, a little background information about me. Having a love and aptitude for electronics, and technology in general, studying electronic engineering during my college years was an obvious choice. After college I worked in the Electronic Engineering/Service and Telecommunications industries for a number of years while I was figuring out my long-term career plans. During this time I even owned a successful consumer electronic service storefront for a bit (until the building/property was purchased for a new commercial development). Ultimately, I chose, and switched to Information Technology as a career path. That was the better part of two decades ago. No regrets. I excelled in I.T. and have become an expert in the field. My specialty is helping small-medium sized businesses overcome their legacy/badly-engineered information technology solutions that hinder employee productivity and business growth potential. I will elaborate on this a bit more in the paragraphs below.

My story begins in 2013 while I was deciding my next career/life step. The choice was basically down to two options, continue building my career in I.T. and move on to the next level, or start and build a new business. I spent the next ~6 months interviewing for select positions, thinking about business/product ideas, and finishing the renovations of my house. Ultimately, I decided if the right opportunity came along I would continue my I.T. career. I had already invested >17 years going down this path so it would be a lot to give up to focus on a business. I turned down many positions during this time because they did not meet my criteria. Until one did.

I interviewed with, and accepted employment at a small medical device manufacturer located in Redmond, WA, called Spiration. Beside meeting my criteria, it was also an opportunity to help out a company in desperate need of an I.T miracle. Their entire information technology solution, end-to-end, was a joke. Not a funny joke though. They never had anyone running I.T. for the company who was actually qualified, or even knew what they were doing, and it showed. For example, shortly before I took over, they let the magic smoke out of a UPS that they had severely overloaded, they also had servers spontaneously rebooting due to brownouts related to another overloaded UPS/circuit (all 15Amp 120V std. wall outlets feeding the UPS’s btw). There wired network was a bunch of default config switches routed through one single point of failure. The wireless network was a bunch of OTS consumer wireless routers connected to the DMZ through a 10bT Hub (yes, a hub, from the 1990’s). If you could even connect to the wireless network in the corporate office, you would then have to VPN into the corporate network. ISP connectivity was a 4.5 flex (1.5 for voice, 3.0 for data). Btw, on a wired connection, Internet page loads took 30-45 seconds on average, on a wireless connection, streaming Pandora was hit or miss (throughput rated worse than dialup during my initial testing). They also had a legacy Exchange 2003 environment. They owned a license for 2010 for a few years, but the prior admins could not handle the environment upgrade. Systems, core services, and enterprise applications were a mess as well. For instance, they were out of IP addresses, robbing Peter to pay Paul and such (they just had a flat /24 network) That is just a very brief list. Just about everything needed to be corrected, infrastructure, hardware, software, processes, license management. Most of all, they needed a unified vision for their end-to-end information technology solution.

They, the CEO & Executive Director of Finance, were looking for someone to come in and take over I.T. for the company. Provide a unified vision and direction, manage the I.T. department, and basically correct everything that was wrong with the information technology infrastructure. I excel at this, and I was looking for a Director of I.T. gig. This was a good fit. Of course, I did not have the obligatory five years of experience as a Director of I.T. that every organization wants. It’s the ironic thing where you need to have to already done a certain job for x years before you can get a job doing that certain thing. Long-story-short, I took a chance and entered into an employment agreement with the CEO, and the Executive Director of Finance. Prove my abilities over the next 12 months and get the title and the compensation to match. Goals and milestones were clear, and they were ones I could meet.

Over the course of the next year I overhauled the entire information technology solution at the company (top 10 listed): _1) A new scalable power solution from the ground up (new circuits, UPSs, PDU, all properly engineered). _2) A new converged, seamless, centrally-managed wired/wired network with HA for core/critical systems (collapsed core design, 3850-x stack (StackWise) as core, with integrated WLC, and a stack of 2960-x (FlexStack) switches for the access layer, repurposed existing HP switches for redundant server network backbone, and of course, implemented VLANs for proper segregation of traffic). _3) Redundant ASA 5515’s for FW/security. _4) Migrated to a 50Mbps fiber ISP connection. 5) Upgraded their legacy Exchange environment to 2010 and budgeted for upgrade to 2013 in late 2015. _6) Installed Lync 2013 as the first step towards a unified communication and collaboration solution. _7) Introduced hardware and software standards for client, server, and network hardware. _8) Implemented WDS for centralized image storage, network based client and server imaging, and future automation (once the legacy OS/software issues were out of the picture). _9) Replaced a legacy SFT solution that was costing the company $10k/yr in licensing (new solution was $800/yr). _10) Rectified most of their license tracking and compliance issues by switching to Enterprise licensing model, and migrating to O365 to replace many legacy editions of MS Office. That is just the top ten items. During this time I was also handling the management activities (budget creation/management, I.T. roadmaps, vendor management, project management, etc..) and also 50% of the help desk activities because they failed to hire the FT Help Desk tech (which was part of the original agreement). In the end, to make sure I met all goals/milestones and finished all standard work, I was working mostly 80 hour weeks, and also spending 15 hours a week commuting. In the end it was all going to be worth it, a small sacrifice to get the title and compensation.

Nice little review at the end of the trial year. I met all goals/milestones, had a ton of other achievements during the time, and the IT department was running smoothly (a first for this company). The review went well, and it was confirmed at that time that I would be getting the title and pay at the next HR/year-end cycle.

Then things started to get weird. First sign of trouble, during that same meeting, I was informed that the CEO and Executive Director of Finance now wanted to make the phone system replacement project a priority and get it done by the end of the year, despite the fact that this project was initially scheduled to begin (discovery phase) in Q2of the following year. There was also the fact that this was already a week into November. Getting things done during the holiday season is never an easy task, but running a complete corporate phone system replacement project from start to end in just over a month and a half, during the holiday season, is basically impossible. Especially when you are switching from a legacy digital key system to a HA VOIP system that integrates with Exchange and Lync. There was also the fact that most of the key players in the various business groups would be on vacation at various times. Obtaining the three necessary competing quotes and going through the review cycle would take most of this time by itself. I mad all of this clear and started the project, while setting the proper expectations. I mostly dismissed this odd request as standard corporate agenda and naivety regarding what actually needs to transpire for a project like this to be completed successfully. After all, this is not the first time I had seen decisions made at a high level, that were unrealistic.

By the beginning of February, I had the first quote for the new phone system on the CEO’s and Executive Director of Finance’s desks. By that time I had completed all discovery, business requirement gathering, and engineered a new Cisco-based VOIP system (BE6kHD, critical services in HA, room for planned expansion (e.g. CUCC) – 8800 series endpoints (phones), - CUPS for RCC and presence via lync - Unity for Exchange integration - 4331 ISR for SIP trunk termination (switching to SIP trunking from the legacy T1 PRI) - Barix Instreamer for MOH – etc. ). Took longer to get the two competing quotes. You have to purchase the Cisco equipment through a vendor, and Cisco gives the first vendor to contact them about a certain purchase a sizable discount. Due to this, no other vendor wanted to quote for the hardware. I ended up having to get competing quotes for other non-equitable hardware.

March. Things continue to get weirder week by the week. I get ready to take a vacation for a week in April, but I am informed that I will not be allowed to take a vacation at this time. The reasoning was (from the Executive Director of Finance), that if the CEO finally signs off on quote for the new phone system, and we can get all the equipment in, and all the consultant resources are available on short notice, I need to be onsite for the phone system installation during April. I stated that I would just plan for, and schedule the install for a time after my return (it is only a week after all). There was no rational reply to this, I was just informed that waiting a week was unacceptable and I would not be allowed to take my planned vacation. Btw – it is worth noting that at this point, the phone system quote had been on the CEO’s desk for signature for more than a month, and was still just sitting there. In addition, I am also given excuse after excuse as to why the Help Desk role has not been filled (or even advertised), something I was guaranteed would be taken care of by now. By this point, I have a pretty good idea that I am going to get screwed. I stick it out till the review cycle. In for a penny, in for a pound,….

April. Time for that title and compensation I have worked my ass off to earn. Of course the pressure is still on to install that phone system the moment after the CEO signs off on the project. There is also more than normal pressure to finish a bunch of other smaller projects (this had also been the case most of past few months).  Interestingly, they delay the review cycle for everyone. Then, pretty much everyone has been reviewed except for me. More pressure to get some projects and upgrades done. Lots of other odd behavior as well.

It is now May. Review day finally comes. On the schedule. I’m the last one to get reviewed btw… Well, around noon on that day the other member of the IT department (legacy application support, mostly the legacy applications he coded, and also the other 50% of help desk tasks) announces that his mother is in the hospital (in Ireland) and he has to get on a flight. He will be gone 10 days. I get a scheduling update for my review shortly after; my review has been moved out 10 days. I confront the Executive Director of Finance at this point and get my confirmation. They are screwing me over.

Worse than the fact that they screwed me over, is that they always intended to screw me over. From day one. They needed someone to correct all their I.T. problems so that the company could grow, and so current employees could be productive. To achieve their end goal they lied to me, they deceived me. In those review meetings, in weekly meetings, even casual conversations, they lied to me with a smile on their face. They even conspired to get me to complete as much high-level work as possible before they would have to reveal the truth.

You would think the story ends there, but it does not. I cannot land another Director of I.T. role because A) I do not have 5-10 years in a director role (only 18 months), and B) Spiration is not admitting the amazing work I did for them; in fact, they are doing just the opposite. You see, they are pissed at me for making my situation public, and not just going quietly into the sunset after they screwed me. So, in addition to random passive-aggressive threat here and there, they are giving me bad reviews. I usually just inform potential employers that they cannot contact Spiration, which also looks bad. In addition, it I have heard that the Executive Director of Finance is claiming credit for all my hard work. Keep in mind that this is a guy who once told me he was wholly against any client upgrades to Windows 8 at Spiration because Windows 8 is a “tablet OS” and he and other employees need to be able to use a mouse and keyboard, using a touchscreen was not going to work out. Yes, he actually thought that it was impossible to use a mouse and keyboard with Windows 8. This guy is a serious jackass that just uses people for his own advancement and agenda. 

Initially I did look for other director roles, and even considered a few close by SE roles. After some odd interview cancellations, I did some investigating and learned from a recruiter what the deal was. At this point I have declared my I.T. career dead. Murdered is a more apt term.

So, I am applying my original electronic engineering schooling, years of hobbyist experience, and my other skills to launching Zifnu Electronics LLC. I love electronics and technology in general, always have. This was the business I was thinking of starting in 2013 before I made the mistake of working for Spiration. I was always planning on launching the company eventually, I just did not have the time while I was dedicating 95 hours a week to Spiration.

Am I the most skilled and experienced electronics engineer out there, absolutely not. Do I know enough to keep my projects/products from bursting into flames, yep. Can I offer something that is unique and interesting, I would like to think so. The Zifnu Rocket Kit was something I wanted to bring to market because it is fun, and a bit different. It is a combination of things I loved as a kid, electronics and model building. I was also playing way too much Kerbal Space Program when I had the idea for the Rocket Kit, so that may have influenced me a bit as well,… ;)

Even though the Kickstarter campaign was not successful, I do not consider this a failure. I never intended the Rocket kit to be a huge source of income. My intentions were to have some fun offering a unique product that hopefully inspired a few future electronic engineers, and maybe taught them some basic concepts related to electronics and model building. (Note: the instruction manual I had on the website was just the first draft, I was planning on expanding the content and hopefully getting some better illustrations in there as well.) Secondly, bringing the rocket kit to market was an excellent learning opportunity that allowed me to get all the manufacturing partner relationships in place for the Rocket Kit and future products. While I have done parts of this for other companies in the past, most of it was locally sourced rather than international. So this was definitely a learning experience. For one thing, I learned the regulations for manufacturing a product in China for marketing to kids under the age of 12 in the U.S. is a major hassle for a product you only intend to make 1-10k of. Which is why I chose to only market to 12 and above even though younger audiences would have enjoyed the kit as well.

The economics of it all. I did all the math up front, $50k for ~1000 units was the bare minimum. And at the $50k mark I did not even intend to pay myself a salary since the sum was so small, I would have just reinvested the profit in the company. Besides being a learning experience, it was an opportunity to get Zifnu Electronics established and promote a little brand/company awareness as well. I’ll be the first to admit that it did not draw nearly as much attention as I expected. I mean, really, who doesn’t love rockets?

Zifnu’s next product is something a bit more practical, I believe it will have a larger audience in general. Time will tell.
 

Offline invzim

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Re: EEVblog #887 - The Economics Of Selling Hardware
« Reply #59 on: June 27, 2016, 02:00:24 AM »
One thing missing, is how much of your batch you sell.  I have a niche product that sells at a low steady rate, and typically have 100 pieces made every batch.
While 2.5 x COGS may be a good rule of thumb, remember that the maths presented in this video is not valid until you've sold your WHOLE BATCH.

Sitting on loads of inventory has it's cost, and right-sizing the batches may not be easy.  I calculate how many pieces I have to sell of a batch before the batch is 'break-even', and after that point it's mostly profits.  At 2.5xCOGS, the break-even wold be reached when 40% of the batch is sold.
 

Offline VEGETA

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    • VEGEteK
Re: EEVblog #887 - The Economics Of Selling Hardware
« Reply #60 on: September 05, 2016, 06:13:12 AM »
well, that is a really good video. However I have some issues.

1- PCB\parts customs\input tax or fee. In my country Jordan, everything is passed through customs and most of the times you must pay. the question is, if they don't know what a PCB is and they think I am a reseller (not a designer) what would I do? I ask this because I think there are many of you who went through the same problem. How much money do you pay for digikey parts when you import them? how many for PCB with or without components? what about a full ready product?

2- Too much initial cost. I mean, I had an idea of a power supply that uses only one Li ion battery and it is small, connected to usb for charging (isolated) and that happened to be like dave's one. now when I searched for parts... I think the minimum I could get is this:


all from digikey...

LCD: I don't know, couldn't find cheap small ones.. so let us say 10$.
DC-DC: 10$.
MCU: 3$
case: 3$
other ICs: 5$.
passives and others: 10$
connectors: don't know, assume 10$.

total = 51$! call it 50$.

this is only components, for pcb, shipping, blah... you can confidently add 20$ to it so it is approx 70$ cost! assuming I will solder\assemble the boards and all! (no PCB assembly).

now, as 2.5 figure... 70 * 2.5 = 175$ << would anyone REALLY buy it in this price?! this is the damn question.

Getting components as large quantities will help but for me and any starter, this is just impossible. so one have to start like this, and it won't really do that marvelous change in price. How much are you really gonna sell your USB supply? what about the original uSupply? uCurrent is cheap to manufacture because it doesn't use expensive parts and it is so small. this was an advantage to you for sure.

3- the idea:

for example if i really liked an idea, will the others do? I have a problem of running ROS (robot operating system) in a cheap platform. All ready-to-use ones costs THOUSANDS... If you want to commit suicide I will show you the quote I got for Jackal robot... So I thought I would solve it my own way! I came up with a very simple board that has motor driver l298 and an IMU module (MPU6050) and it can accept encoder inputs, has smd 2 18650 battery holder and switching supply 5v, 3.3v linear.... the solution in it is a PIC MCU that calculates what we call "Odometry" so it can send it to ROS host (Pi3...) via serial port, and it takes ROS commands for driving the robot and translates it to motor commands.

Finally I am sure it will work.. 100%! and I can make a great board for it in CM. However, it will cost as much as 50$ in total (components alone can reach 30$). I don't think anyone will pay 150$ for it despite it can do MUCH stuff! I can write a simple arduino and ros libraries to control the board via serial port only!

But who will buy it? in that minimal 150$ cost?! I guess you must make a video for these stuff of how to get the product and manufactures it cheaply.

thanks!
I am the cult of personality!

VEGEteK electronics video blog: https://www.youtube.com/channel/UCXodUSRG2__hTpW4ZgOgtcw
 


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