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Originally Posted by PhilS /img/forum/go_quote.gif
One does need to account for labor costs in a 1-man operation. It's called "opportunity cost." And you can't just price "according to desired earnings" in a competitive market. You can only charge what the market will bear. And, finally, I think it's quite an exaggeration to suggest total labor time associated with a cable enterprise would work out to 10 minutes of time per cable. You have to include time involved in fabrication, marketing, the purchase and sale process, communicating with the purchaser, shipping the product, resolving complaints, etc., etc. It's bound to add up pretty quick.
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opportunity cost is an economic tool - it is not a real cost that is accounted for, and I guarantee you'll never see it on any financial statement or management accounting documents
you're right that in a normal market, of which one parameter is having reasonable consumers, pure competition would dictate price. in audio, especially with regard to cables, what you are selling is prestige and ego-boosts, and the consumers are very far from reasonable. take a look at Virtual Dynamics' garden hose, home depot wire, and sand blasting particles, for example - if those who heard this cable swear by a sonic improvement, I would estimate that it does not take much to create a world-class audio cable. the market certainly will bear quite a bit, as can be seen all around us! heck, if I took the time to mill some brass, I could probably sell a single $500 cable for $8000.
btw - if you think a 25% return on investment is "not worth it," PLEASE PLEASE PLEASE give me the name of your broker
i do not think it was hard to figure out that the 10 minutes of time allotted was for only the cable construction - but play dumb if you wish
i'll add more time, to satisfy your requirements:
- copy/paste key words from stereophile reviews, to create a b.s. jargon blurb about the cable: 5 minutes
- answer an email making outrageous claims, beating around the bush or flat out ignoring real questions : 2 minutes
- click "print shipping label" from the paypal order form: 1 minute
- stuff cable into cardboard box, affix shipping label, and tape shut: 3 minutes
- drive to post office: 15 minutes (round trip)
26 more minutes of my time = $5.
factor in $1 for gasoline, $10 for the box and peanuts (being very liberal), and $1 for a twinkie snack to eat on the way
keep in mind that mine are "boutique" cables, and I don't run a huge production line. why? because everyone knows that the true high-end of audio cables must be "painstakingly" put together by hand, in order to pay attention to every detail
such few orders means I get to keep my full time job. by the end of the year, after creating enough fake extra accounts on several hi-fi forums, I will become FOTM in no time, with a backlog of orders pre-paid so that once word gets out that the cables do not live up to the hype, it is too late to do anything about it
I will of course be very careful with my words under these aliases, even offering slight criticisms about the product. of course, these will be along the lines of "poor WAF" and "unfortunately not as analytical as others may prefer," so that no one thinks the cons are worth their consideration.
I really may try this out sometime