Exploring potential for manufacturing "DIY-style" projects

Do you have a contact at a contract manufacturer in China?

Unless you can outsource to China you will not be able

to compete on cost.

Lets face it, it's our own fault.

As consumers, we demand cheaper and cheaper products.

I, too would love to be able to make a modest living creating

the type of products you mentioned. The problem is that no

one is going to buy my product if they can get pretty much the

same thing that was built in China for less than half of my parts

cost.

Good luck

Let me know how it turns out...

I think it would be great if you could offer kits similar to what Beezar or Glass Jar Audio do, it's a great service if people don't want to go through the hassle of tracking down all the parts from multiple vendors. 

Quote:

Originally Posted by dsomeone 

As with any new business, some things that need to be considered are startup costs and ongoing operational costs - but I'm wondering (and exploring) if part of the problem is simply the profit margins that businesses demand.  I was able to generate a BOM for a mini3 v2 headphone amp that cost me ~$60 in qty. 250, significantly less in production quantities. Selling it at $300 (not unheard-of if you look at eBay, etc.) is a 500% profit margin in low quantities, 650% in higher quantities.  That's rather high!

 

If I can build something for a reasonable cost, and sell it at a reasonable cost, and make enough money to pay a few employees, keep the lights on, pay my bills, etc... then I will have met my goals. I'd be happy to build and run a maintainable business that eventually sends my kids to school, and have fun doing it.  Whether or not it also buys me a couple of Porsche's isn't so important.

 

 

Good luck. For the record, a mini3 without drilled panels typically sells for $100 built. With panels, the price increases (of course).

I'm a builder, and there isn't any money here. Not to discourage you of course, good luck.

Quote:

Originally Posted by dsomeone 

As with any new business, some things that need to be considered are startup costs and ongoing operational costs - but I'm wondering (and exploring) if part of the problem is simply the profit margins that businesses demand.  I was able to generate a BOM for a mini3 v2 headphone amp that cost me ~$60 in qty. 250, significantly less in production quantities. Selling it at $300 (not unheard-of if you look at eBay, etc.) is a 500% profit margin in low quantities, 650% in higher quantities.  That's rather high!

 

If I can build something for a reasonable cost, and sell it at a reasonable cost, and make enough money to pay a few employees, keep the lights on, pay my bills, etc... then I will have met my goals. I'd be happy to build and run a maintainable business that eventually sends my kids to school, and have fun doing it.  Whether or not it also buys me a couple of Porsche's isn't so important.

 

 

The following is hard reality check:

Do not forget in any BOM, the cost of cases and panels, wires, batteries and chargers.  Also do not forget the cost of designing and fab'bing the PCB.  As well, for something like the Mini^3, you'd have to get approval to even go ahead.

In running your business, there is also the cost of rent, power, heat, website, hosting, domain names, cost of labour (or other manufacturing), testing, income taxes, defective builds (warranty), support, packaging, documentation, inventory costs, marketing costs, meeting electrical standards and getting approvals (worldwide) and other items I haven't even listed.  Soft costs far exceed the hard costs.

You have also mentioned employees - there you start to add CPP, UI, WSIB and many other costs that the average person does not think about that a business pays.  For where I used to work (in Canada), we considered it about an extra 35% about the actual salary that the employee for those extra costs.

When you start to add all that up, $300 for a $60 parts BOM is nothing.  Especially when you consider how many you'd have to see to cover all that stuff on a monthly basis. 

And then, once you've designed your amp, had them built and are selling them for $300, making a slim profit, be prepared for someone to clone it and sell it for half the price and you are stuck on a pile of inventory and your start up debt.

I'm not trying to be a downer, but trying to point at the facts (as I know them) that you need to know to start a business.  It *can* be done, but it needs a very good start up plan.  And a very good plan B.

At the expense of seeming to "pile on" after you have gotten a number of well-reasoned replies already, I wanted to add a few thoughts.

First off, is your plan to create a business, or a job for yourself? Keep in mind that once the heavy intellectual lifting is done, the tasks at hand are assembly worker, shipping and receiving clerk, and book-keeper.  These are not high paying jobs, and in the current economy, the vast majority of consumers are price-driven, so they are not inclined to compensate you well for performing these tasks. 

Second, if you think there is any such thing as a profit margin over 100%, I might question your business training.  The highest profit margin is 100%, where you sell something you got for free, and had no costs involved in making the sale - good luck with that! 

Third, if you do have stuff made under contract in China, there is always the chance, so many people have claimed,  that you will be paying all of the costs for the back-door product which is sold for less than you sell your product, and that competition pretty much drives you out of business.

Fourth, be very wary of trying to turn your hobby (if that is the case) into your job. If you are doing this for fun, and maybe to make a few extra bucks, with minimal investment and overhead - go for it.  Otherwise I would be very careful.

Maybe you'll prove us wrong, and I wish you the best of luck, but please consider what people in this thread have been telling you.

Best,

Mark